Perhaps you are dealing with nonstop harassment from creditors seeking payments from you and you want this situation to end.
If you have decided to declare bankruptcy, keep in mind that as soon as you file, you release the power of the automatic stay. However, along with benefits, there are also a few drawbacks to keep in mind.
Stopping a foreclosure
If you are behind on your mortgage, the automatic stay will prevent your financial institution from following through with foreclosure proceedings. It will also keep a utility company from turning off your gas, electricity or water.
Ending wage garnishment
Thanks to the automatic stay, you will no longer have to worry about wage garnishment. Once you declare bankruptcy, your entire salary will once again be available to you.
Protecting against tax liens
The Internal Revenue Service has a right to demand payment for any taxes you owe, and you must still file tax returns after you declare bankruptcy. However, once you file, the IRS cannot place a tax lien on your property or income.
Understanding the downside
The automatic stay will not prevent a lawsuit concerning delinquent child support payments from going forward. Also, if your landlord is preparing to evict you, the automatic stay may only delay the process. The courts generally take the side of the landlord and even if you have been a good tenant, the landlord will likely receive the court’s approval if he or she is determined to evict you.
Making a decision
It is natural to have questions about an automatic stay and similar matters when a burden of debt has seriously complicated your life. Explore your options. Declaring bankruptcy is a big step but you may find it the best decision for your circumstances.