The moment a Florida Bankruptcy Court accepts your bankruptcy petition, an “automatic stay” goes into effect. The automatic stay acts as a pause button for creditors, meaning as long as you are in the bankruptcy process, most of your creditors cannot continue with collection efforts or contact you directly about your outstanding debts.
However, while this tool applies to many debts, it does not free you of every financial obligation you have when you file for bankruptcy. An attorney could explain the role of the automatic stay in Jacksonville bankruptcy in further detail and help you understand how it may impact your financial future.
How Can an Automatic Stay Help?
The primary function of an automatic stay during a Jacksonville bankruptcy is to freeze any collection proceedings that have not advanced past a certain point while also allowing the debtor in question to maintain possession of specific property and services until they have finished filing. For example, if someone is behind on their power and water bills, declaring bankruptcy and getting an automatic stay would allow them to avoid having those utilities shut off for the immediate future.
Additionally, this tool can temporarily prevent home foreclosures, evictions, car repossessions, and other similar actions, but only if done early enough in the process. If a landlord has received a court judgment for a debtor’s eviction, a mortgage holder has conducted a foreclosure sale, or a creditor has already legally repossessed a debtor’s car, an automatic stay would not stop those processes from continuing. It can also briefly end wage garnishment stemming from a court order in some situations.
Any creditors seeking repayment for unsecured debts like credit card bills must stop trying to collect on those debts the moment an automatic stay begins. They cannot resume collection activities unless the Court refuses to discharge their debt when the bankruptcy ends. A local bankruptcy attorney could further explain how an automatic stay could benefit their current financial situation.
Exceptions to the Automatic Stay in Jacksonville
An automatic stay only stops collection activity for financial debts and obligations. It often does not prevent any other court proceeding that might be related to those debts. For instance, if a debtor is facing criminal charges for writing a bad check, an automatic stay could temporarily stop them from having to pay fines and court fees associated with that case. Still, it would not stop the prosecutorial process or the imposition of criminal penalties upon conviction.
Automatic stays also do not apply to paternity actions in court, lawsuits seeking the establishment or modification of a family support order, loans against pension plans, or IRS actions like audits and tax assessments. Most family support obligations that are already in place cannot be put on pause by an automatic stay, especially child support and child custody obligations.
Talk to a Jacksonville Attorney About Automatic Stays in Bankruptcy Proceedings
While you are busy filing for bankruptcy and reestablishing your financial position, you should not have to deal with creditor harassment and continued obligations to pay bills you cannot afford. Fortunately, the role of the automatic stay in Jacksonville bankruptcy is to ensure you do not have to manage either of these until the filing process is complete.
However, certain debts and obligations are not affected by the automatic stay and knowing about those in advance could be essential to preserving your current and future financial health. Get in touch with an attorney today to discuss your options and learn more about what an automatic stay could accomplish in your situation.