The Automatic Stay in Michigan
One of the most powerful tools the United States Bankruptcy Code provides is the automatic stay. The automatic stay will stop most creditors from continuing with foreclosure, garnishment, eviction, repossession, harassing phone calls and ongoing litigation. The automatic stay goes into effect immediately upon filing a Chapter 7 or Chapter 13 bankruptcy.
Home Foreclosures
If your home is being foreclosed, the automatic stay will stop the foreclosure proceedings. A Chapter 13 bankruptcy will allow you to catch up on your past payments and keep your home. A Chapter 7 bankruptcy will make sure you are not liable for a mortgage deficiency due to the foreclosure.
Wage Garnishments
The automatic stay will also stop wage garnishments. The garnishment will be stopped as long as the bankruptcy stay is in effect. To make the garnishment stop as quickly as possible, notice of the bankruptcy filing will need to be sent to your employer’s payroll department. The creditor will also need to file a release of garnishment with the local court so your employer knows it can stop withholding your income.
Evictions
If you are being evicted from your home, the automatic stay may provide some help. If you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy before your landlord gets a judgment for possession, the automatic stay will prevent the landlord from starting the eviction process. Once the landlord has a judgment of possession they can continue with the eviction process regardless of a bankruptcy filing. If you would like to stay in the home, a Chapter 13 bankruptcy will allow you an opportunity to catch up on the back rent.
Stop Creditors
The automatic stay will stop harassing phone calls and most ongoing litigation. Filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy will prohibit credit card companies, medical companies, and collection companies from attempting to collect on debt incurred prior to the filing of the case. The creditor must cease all litigation, phone and mail contact with you. If a creditor calls you after the filing of the case, let them know you’ve filed for bankruptcy and give them your case number. If the creditor continues the harassment, let our office know immediately. We can file a motion with the bankruptcy court and potentially collect damages.
Repossession
The automatic stay will prevent vehicle repossession as well. As the creditor must stop any collection efforts, your car lender is not allowed to repossess your vehicle after the filing of a Chapter 7 or Chapter 13 bankruptcy case. The lender will now need court permission to repossess your vehicle. The lender will need to file a motion with the court requesting that the automatic stay be lifted in order to continue their repossession efforts.
Utilities
A Chapter 7 bankruptcy filing can prevent home utility disconnections. However, you must provide “adequate assurance” to the utility company that you will pay future utility bills within 20 days of the filing of your case. Contact your local utility provider to determine what their adequate assurance requirements are.
Call our office today at 248.237.7979 to prevent foreclosure, stop garnishments, avoid vehicle repossession, cease utility disconnections, and end harassing phone calls!