The idea of filing for bankruptcy can be scary for some Florida residents, but it might be necessary. The debtor might feel some relief once the automatic stay goes in place. You should know what this means.
What is an automatic stay?
After a person files for bankruptcy, the court orders an automatic stay. The automatic stay prevents collections from happening and creditors from filing civil lawsuits against you to collect the money owed to them. It also stops collection agencies from taking a person’s property to satisfy debts to creditors.
In order to receive an automatic stay, a person must have a legitimate reason for filing bankruptcy. For example, if the individual is at high risk of foreclosure, the court will recognize that an automatic stay is needed.
How does an automatic stay work?
Once you have filed for bankruptcy, the automatic stay applies. It will immediately take effect and stop all actions against you taken by creditors or collectors. The automatic stay protects you when the circumstances are considered an emergency. In addition to protecting you in the event of foreclosure against your home, it can protect you from being evicted, having utilities shut off, your vehicle being repossessed and wage garnishment.
At the same time, the automatic stay doesn’t protect against criminal proceedings, some tax issues and support ordered by the family court. If you have filed for bankruptcy multiple times or last filed within the last year, the automatic stay is only in effect for 30 days unless there’s a request to continue it and you filed in good faith.
How long does the automatic stay remain in effect?
Once you have an automatic stay in place, it will remain until your bankruptcy case has been settled and closed. With the exception of filing multiple times in one year when it stays for only 30 days, you can expect the automatic stay to last for as long as your case takes.