Filing for bankruptcy in Arizona is somewhat akin to hiring a financial body guard. Whether you were in danger of losing your house, your utilities, or a large portion of your salary in wage garnishments, bankruptcy can protect you from such dangers for a limited amount of time.
The powerhouse hero behind this protection in bankruptcy is called the automatic stay. The automatic stay holds creditors at bay from collecting on your debts once you have filed for bankruptcy. While it is not “bulletproof,” so to speak, it is the automatic stay that makes bankruptcy the financial safe haven that it is.
What will the automatic stay protect me from?
The automatic stay protects you from certain legal or collection actions from your creditors as soon as you file for bankruptcy. While some of the effects are short term, the time it buys you can be invaluable as your bankruptcy petition gains footing.
One of the primary protections afforded by the automatic stay is halting foreclosure proceedings on your home. Creditors may still be able to pursue foreclosure eventually, but the time you gain while the foreclosure is halted allows you time to liquidate other assets to pay off creditors, secure alternate housing arrangements, or catch up on your mortgage payments. The automatic stay is typically its most effective in a Chapter 13 bankruptcy, as it gives you a period of time to reorganize your debts and create a payment plan that bring your mortgage payments back up to speed.
Other effects include temporary protection from the disconnection of your utilities for a minimum of twenty days. Though utility bills tend to be much lower than many other payments you face, services like electricity, gas, and water are lifelines, and bankruptcy law understands the necessity of these services year-round. The automatic stay also protects you from facing multiple wage garnishments.
When will the automatic stay fail to protect me?
While the automatic stay is a good tool to use, it is limited in its scope of financial protection. You will still be required to pay alimony or child support, and lawsuits demanding such can be filed against you. Creditors can also file a motion with the court for relief from the stay, meaning that if you are not making payments that you are supposed to be making post-filing, actions may be filed against you.
When you are filing for bankruptcy in Arizona, you need to be certain that you are filing correctly in order to ensure that you can benefit from the maximum protection that bankruptcy and the automatic stay offers. Call the Phoenix bankruptcy attorneys at Curry, Pearson & Wooten today at 602-258-1000 to get started on your own bankruptcy petition with an experienced lawyer.