When Tyler residents file for bankruptcy - whether Chapter 7, Chapter 13 or another form of protection - they gain the immediate benefit of the automatic stay. The automatic stay halts efforts to collect on your debt while the bankruptcy proceeds through the court. This is a powerful tool for consumers, but it's important to understand the limitations of the automatic stay as well as creditors' rights with regards to the automatic stay.
First, let's look in some detail as just what the automatic stay can do to help a borrower filing for bankruptcy. It can stop a bank's attempt to foreclose on your home: a particularly important factor for those using Chapter 13 as a way to keep their homes after bankruptcy. In many cases, the automatic stay can at least delay a landlord's attempt to evict you from your apartment, although a landlord may still be able to evict if he or she has a judgment against you from before the automatic stay took effect, or if there's evidence that you are violating your lease in other ways.
The automatic stay can protect utilities like your electricity, gas, water and even your phone line from getting shut off. It will halt garnishments from being taken out of your salary - that's true even if you have more than one garnishment, potentially allowing you to access a much greater cash flow than you could otherwise. The automatic stay can also stop efforts to collect public benefit overpayments (unless you become ineligible for those benefits before the automatic stay is lifted).
With those strengths and benefits in mind, we'll look in a follow-up post at the limitations of the automatic stay. The information is provided as a general background on bankruptcy; it is not intended as specific legal advice for any Tyler residents struggling with debt.
Source: Findlaw.com, "The Automatic Stay: Stopping Creditors with Bankruptcy," accessed on April 7, 2018