October 2024

If you’re a resident of Auburn or Opelika, Alabama, and considering personal bankruptcy, then you probably understand the stress of mounting debt, constant creditor calls, or even potential lawsuits. Yet, whether you’re considering Chapter 7 or Chapter 13 bankruptcy one of the most powerful tools you can leverage is the “automatic stay”. 

So, in today’s chapter of Back to Basics, here is a breakdown of the basics of an automatic stay, how it works in personal bankruptcy, and its key benefits for debtors from David S. Clark, a Chapter 7 and Chapter 13 bankruptcy attorney in Opelika, Alabama. 

What is an Automatic Stay?

Whether you file for Chapter 13 or Chapter 7 personal bankruptcy, the automatic stay is a federal provision that takes effect as soon as you file. Once in place, creditors must stop all attempts to collect debts, garnish wages, foreclose on your home, or repossess property. In a way, the automatic stay acts as a “shield” to give you relief from the financial pressures that brought you to bankruptcy. 

How Does an Automatic Stay Work?

When you file your bankruptcy petition, the court immediately issues the automatic stay. This notice is sent to your creditors, and they are required by law to cease any collection efforts. This protection remains in effect throughout your bankruptcy process unless a creditor successfully files a motion to lift the stay.

While the stay is not permanent, it offers you a window of time to organize your finances, negotiate with creditors, or prepare for the discharge of certain debts. In Chapter 7 bankruptcy, the automatic stay is in place until your assets are liquidated and debts are discharged. For Chapter 13 bankruptcy, the stay can last much longer, often throughout the entire repayment plan, which could span three to five years.

The Key Benefits of an Automatic Stay

An automatic stay provides several crucial advantages, especially for individuals who are drowning in debt. Here are the key benefits:

1. Stops Collection Calls and Harassment Once the automatic stay is in effect, creditors are prohibited from contacting you to demand payment. This means no more harassing phone calls, letters, or lawsuits, giving you peace of mind and the space to focus on your financial recovery.
2. Halts Wage Garnishments If your wages are being garnished to satisfy unpaid debts, the automatic stay puts an immediate stop to this process. You’ll have access to more of your paycheck, which can help you cover your day-to-day expenses while you’re working through bankruptcy.
3. Prevents Foreclosure and Repossession One of the most significant benefits of the automatic stay is that it can stop foreclosure proceedings or repossessions in their tracks. This is particularly valuable for those filing under Chapter 13, as it allows you to create a repayment plan and potentially save your home or car from being taken.

Your Personal Bankruptcy Attorney in Opelika – David S. Clark

The automatic stay is one of the most powerful protections you can receive when filing for Chapter 7 or Chapter 13 bankruptcy. It provides much-needed relief from debt collection efforts and allows you to have a second chance. If you’re considering bankruptcy and want to learn more about how the automatic stay could benefit you, consult with a qualified bankruptcy attorney, like David S. Clark in Opelika, Alabama who can guide you through the process and ensure that your rights are protected. For more information, contact the bankruptcy attorneys at David S. Clark today! 

The next chapter of our “back to basics” series: Bankruptcy and Wage Garnishments.

As we’ve said over and over, bankruptcy can seem extremely scary. The thought of losing your car, home, or other possessions is certainly intimidating. Thankfully, there are often more myths surrounding bankruptcy than truths. Ultimately, more than anything, bankruptcy can significantly help with overwhelming personal debt and even protect you from wage garnishment. So, in the next iteration of our “back to basics” series, we wanted to take a moment to give a quick breakdown of bankruptcy and wage garnishments. 

What Are Wage Garnishments?

According to the US Department of Labor, wage garnishment is “a legal procedure in which a person’s earnings are required by court order to be withheld by an employer for the payment of a debt such as child support.” Essentially, this means that your paycheck or any other form of payment would go to a creditor instead of to you. A few more common forms of garnishments could include child support, alimony, student loan payments, and income taxes. 

Ultimately, wage garnishments can be financially crippling and incredibly difficult to stop. This is especially true when some forms of wage garnishments can take up to 50% or more of your wages. Thankfully, there are ways to fight this, and it surrounds that “scary” word we mentioned before…bankruptcy. 

In terms of personal bankruptcy, there are two main chapters, Chapter 7 and Chapter 13. Both of these include a few different processes and forms of repayment, which makes it essential to talk to an experienced personal bankruptcy attorney in Opelika before moving forward. Yet, here is a quick breakdown of both in terms of wage garnishments. 

Chapter 7 Bankruptcy and Wage Garnishments

As soon as you declare Chapter 7 bankruptcy, wage garnishments are stopped due to an item known as the “automatic stay”. Ultimately, the automatic stay gives you a break from the financial stress that often follows wage garnishments. Once in place, this also allows your dedicated bankruptcy attorney in Opelika, Alabama to help you regain your financial footing. 

Chapter 13 Bankruptcy and Wage Garnishments

Much like Chapter 7, Chapter 13 bankruptcy introduces an automatic stay to your unique bankruptcy case. As mentioned above, the ability to stop wage garnishments is one of the most impactful ways that declaring bankruptcy helps when debt gets overwhelming. 

Through the Chapter 7 and Chapter 13 bankruptcy processes, and with the help of an experienced bankruptcy attorney, regaining your financial freedom and getting back on your feet isn’t so far away. It will take hard work, commitment, and starting new financial habits, but it is possible to get back to a healthy place with your finances. The financial easement process of automatic stays, which halt wage garnishments, is only one such way that the bankruptcy process can help.

The Difference With David S. Clark

If you are looking for dedicated bankruptcy law professionals to help you with your financial hardships, look no further than the experienced David S. Clark. Our focused and successful legal team has a combined legal experience of over 25 years. 

If you are an Auburn or Opelika, Alabama resident struggling with the weight of overwhelming debt, let us serve you and help you get back on your feet. Contact us today to begin your journey back to financial freedom.