When you file for bankruptcy, the court issues an order called an automatic stay. The automatic stay provides a freeze on your debts.
According to Cornell Law School, the automatic stay will help to pause actions by creditors against you in most cases. It serves as a period in which the court can process your financial information properly and assess your situation to either confirm or deny the bankruptcy.
Lawsuits
In most cases, if you have a collection lawsuit against you, the automatic stay will stop them. If the court discharges your bankruptcy, then the lawsuit will go away as long as the debt in question is part of your discharge.
An exception is if you are currently going through eviction. The landlord will usually be able to continue the process to remove you from the property if he or she has a judgment of possession.
Wage garnishments
Another thing the automatic stay will stop are all wage garnishments. It may stop garnishments for child support, but do note that you cannot discharge support in a bankruptcy. If your garnishment stops, you should try to make payments to avoid further issues because you will still owe the money after the stay lifts.
Foreclosure
The automatic stay will put your foreclosure on hold, but it depends on which type of bankruptcy you file as to what happens next. If you are in Chapter 13, you may be able to stay in your home and add it to your repayment plan. However, if you are in Chapter 7, you will likely still lose your home.
Life the stay
The court can also lift the stay for creditors upon request. The court may do this in specific situations where the creditor has reason to believe you will damage property, such as a property owner trying to evict you from a rental unit that he or she has proof you have damaged.
