What Is Bankruptcy’s Automatic Stay?

What is “automatic stay”?

The automatic stay is a provision of the United States Bankruptcy Code that goes into effect when you file your bankruptcy petition and that prevents creditors from taking any action to collect on a debt.

Automatic stays can be very powerful reasons to file for bankruptcy, but only if you are at risk of being evicted, having your home or business foreclosed on, being found in contempt for not paying child support, losing basic resources like utility service, welfare, or pay cuts because of wage garnishments.

It stays in place until the bankruptcy case is closed, dismissed, or the debtor gets a discharge. The automatic stay gives debtors some much-needed time to reorganize their finances and come up with a payment plan. In essence, it provides you with a temporary reprieve from your creditors.

In simpler terms, when you file for bankruptcy, the automatic stay immediately stops any lawsuit filed against you and most actions against your property by a creditor, collection agency, or government entity.

What can the Automatic Stay Prevent (at Least Temporarily)?

In Mississippi, the automatic stay is a legal order that goes into effect when you file for bankruptcy. The automatic stay can give you some short-term relief from creditors. It stops them from taking certain actions against you, like utility shutoffs, evictions, wage garnishments, and foreclosures.The automatic stay can also prevent the collection of overpayments of public benefits. However, the automatic stay is only temporary, and it will eventually expire. Once the automatic stay expires, creditors will be able to resume their collection activities.

Evictions and the Automatic Stay in Bankruptcy

Eviction is a legal process that landlords use to remove tenants from their property. If you’re being evicted, the automatic stay may provide some relief, but it’s usually only temporary. If your landlord already has a judgment of possession against you when you file for bankruptcy, the automatic stay won’t affect these eviction proceedings; the landlord can continue just as if you hadn’t filed for bankruptcy. 

If the landlord alleges that you’ve been endangering the property or using controlled substances there, the automatic stay won’t do you much good, either. However, if you’re facing eviction and you live in Mississippi, the automatic stay may give you a little more time. In Mississippi, the automatic stay lasts for 45 days after you file for bankruptcy.

Foreclosure

In Mississippi, a homeowner who is going through with a foreclosure can use the automatic stay to put a halt to the process for a short time. 

When you file for bankruptcy, an automatic stay temporarily halts most foreclosures. However, the automatic stay may not stop a foreclosure entirely. The lender can ask the court for permission to continue with the foreclosure by filing a motion. In order for the automatic stay to apply to your home, you must be current on your mortgage payments at the time you file for bankruptcy. If you are behind on payments, the automatic stay will only halt the foreclosure process until you have caught up on payments. 

For homeowners who want to keep their homes, Chapter 13 bankruptcy will be a better remedy because they could catch up on back payments in a three- to five-year repayment plan. In contrast, Chapter 7 bankruptcy does not have a mechanism that will allow homeowners to retain their homes if they are behind, so the relief provided by the automatic stay will be temporary. 

Utility Disconnections

If you’re behind on a utility bill in Mississippi and the company is threatening to disconnect your water, electric, gas, or telephone service, the automatic stay will prevent the disconnection for at least 20 days. Although the amount of a utility bill itself rarely justifies a bankruptcy filing, it might make sense to file if you have other debt that you can discharge. 

Be aware that the utility company may be able to ask you to pay a deposit to make sure that you will pay for your electricity and gas. In some cases, it may be possible to work out a payment plan with the utility company. 

If you’re considering filing bankruptcy to resolve your issues on utility bills and other debts, it’s important to speak with an experienced bankruptcy attorney to understand all of your options.

Collection of overpayment of public benefits

An automatic stay prevents government entities from taking any debt collection activities against you. This includes the collection of overpayment of public benefits. If you have received public benefits and were overpaid, the automatic stay prevents the agency from collecting the overpayment out of your future checks or from you directly.

It doesn’t mean that if you become ineligible for benefits, the automatic stay doesn’t stop the agency from stopping or denying your benefits for that reason. If you have any questions about how the automatic stay affects your specific situation, it’s best to consult with a bankruptcy attorney.

Multiple wage garnishments

Filing bankruptcy can help stop wage garnishments. In most cases, the automatic stay that is put in place when you file for bankruptcy will stop wage garnishments dead in their tracks. This means that you will get your full salary and be able to get rid of qualifying debt, like credit card debts and personal loans, in bankruptcy.

What the Auto-Stay Doesn’t Prevent

The automatic stay is one of the key protections afforded by bankruptcy. However, there are a few exceptions to the automatic stay. People who file for bankruptcy can’t always stop certain tax and support actions, as well as criminal proceedings and loans from their pension. 

In addition, if you have filed for bankruptcy many times, the automatic stay may only last for a short time.Despite these exceptions, many debtors in Mississippi can still get a lot of help through bankruptcy because of the automatic stay.

Certain tax proceedings

The automatic stay that goes into effect when you file for bankruptcy can provide some relief from creditors, including the IRS. Even though the automatic stay is only for a short time, it’s important to know that the IRS can still send you a tax deficiency notice or demand that you pay an assessment. 

Whether you’ll be responsible for the tax after your bankruptcy will depend on the type of bankruptcy you file and whether the tax gets discharged in Chapter 7 bankruptcy or paid in Chapter 13 bankruptcy. 

Support actions

If you are facing a lawsuit for paternity or child support, filing for bankruptcy will not stop the proceedings. The automatic stay, which halts most collection actions against a debtor, does not apply to child support or alimony cases. This means that if you are behind on payments, the other party can still take legal action to establish or collect the amounts owed. 

In addition, if you are paying child support or alimony and fall behind on your payments, the other party can still take legal action to collect the unpaid amounts. If you are facing a child support or alimony lawsuit, it is important to speak with a reliable automatic stay bankruptcy attorney in Mississippi for legal advice.

Criminal proceedings

If you have been convicted of a crime, you may be wondering if filing bankruptcy will stop any criminal proceedings that are currently taking place. The answer is “no”-the automatic stay bankruptcy Mississippi law put in place will not stop a criminal proceeding. 

This means that if you are already doing community service, you will still have to do that service. Furthermore, if you have been ordered to pay a fine as part of your punishment, you will still be required to pay that fine. In short, bankruptcy will not protect you from the consequences of your crimes.

Loans from a pension

If you have a loan from a pension, the automatic stay that goes into effect when you file for bankruptcy will not necessarily protect your pension from being used to repay the loan. In fact, most job-related pensions and IRAs are exempt from the automatic stay. This means that the money can be withheld from your income to repay the loan, even if you are in bankruptcy. 

However, there are some exceptions to this rule. If you live in Mississippi, for example, the automatic stay will protect your pension from being used to repay a loan. If you have any questions about whether your pension is protected by the automatic stay, you should speak to an experienced bankruptcy lawyer.

Multiple filings

According to Mississippi automatic stay bankruptcy law, if you had a bankruptcy case pending during the previous year, then the stay will automatically terminate after 30 days unless you, the trustee, the U.S. Trustee, or a creditor asks for the stay to continue and proves that the current case was filed in good faith. If a creditor had a motion to lift the stay pending in the previous case, the court would presume that you acted in bad faith, and you’ll have to overcome this presumption to get the protection of the stay in your current case. 

In other words, if you want to file for bankruptcy again in Mississippi, you need to be sure that all previous cases have been resolved and that you can prove to the court that you’re acting in good faith. 

Call our automatic stay bankruptcy attorney now!

If you’re facing financial woes, it’s important to consult with a competent automatic stay bankruptcy attorney in Mississippi as soon as possible. The Rollins Law Firm has helped countless clients navigate the bankruptcy process, and we can help you too. We understand the ins and outs of automatic stay bankruptcy law, and we’ll work tirelessly to ensure that your rights are protected. Contact us today to schedule a free consultation. We look forward to helping you through this challenging time.