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Automatic stays after bankruptcy
By | January 4, 2008
Filing for bankruptcy provides an automatic stay. Once you file for bankruptcy creditors have to stop collecting money from you. They cannot send you letters for collection, you cannot be sued for your debts nor can your car be taken away from you. This automatic stay provision comes into force and protects you from almost all collective activity with very few exceptions. This stay stops the following emergencies:
Foreclosure: If your home is in foreclosure the automatic stay will stop the foreclosure action. Filing for bankruptcy will temporarily halt foreclosure action.
Utilities: If the electricity and gas supply to your house has been cut off, filing for bankruptcy will bring the automatic stay into force which will force the company providing the utilities to reconnect your service.
Repossession: The finance company or bank cannot take back your car once you have filed for bankruptcy. This however is a short term solution. In the long run you will either have to give up your car or reaffirm the loan.
Taxation: Once you have filed for bankruptcy the automatic stay will stop the IRS from issuing a tax levy on you or seizing your property to satisfy your tax debt. It can however still perform an audit on you, demand that you file your tax returns and assess you tax liability and demand that you meet it.
Automatic stays however are not all powerful and they do not work in the following situations:
Criminal Proceedings: The automatic stay cannot prevent criminal action being taken against you. Only in a situation where the action can be separated into criminal and debt related the creditor is prevented from making a claim.
Support: Furthermore a lawsuit against you seeking child support, maintenance or establishing or modifying parental rights will not be stopped by an automatic stay.
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