Bankruptcy has grown increasingly prevalent across the United States. Small newspapers that fall within the Lakeway Publishers, Inc. umbrella, which produces content in Tennessee, Virginia and Missouri, has recently sought out Chapter 11 bankruptcy protection so it can continue providing local stories to state residents.
Companies have numerous resources at their disposal to help them through bankruptcy proceedings. As an individual, the whole process may seem daunting, but the truth is that there are only a few legal concepts to familiarize yourself with. One important concept is the automatic stay, which stops all actions a creditor may take against a debtor. It is a major benefit of the proceedings, and it is one of the main reasons why many people pursue bankruptcy in the first place.
What does an automatic stay entail?
An automatic stay does a few things all at once. Once a person successfully files for bankruptcy, the creditor can no longer garnish his or her wages. Additionally, the process would prevent foreclosure proceedings from starting on a person's home if he or she falls behind on payments. In the event that the person rents, then it would stop the process of eviction. All this will remain in place until the bankruptcy is over. It may not help prevent foreclosure forever, but it can at least buy a person some time to try to get his or her financial affairs in order.
What are the limitations of an automatic stay?
In the event foreclosure proceedings began before you filed for bankruptcy, then an automatic stay may stop it once it has begun. This is why it is critical to be aware of your financial state at all times and file for bankruptcy right when you know you will need it. An automatic stay will not last as long if you have filed for bankruptcy twice or thrice within the last two years.