Bankruptcy Can Offer The Relief You Need

Can an automatic stay help prevent foreclosure?

On Behalf of | Oct 12, 2021 | Foreclosure, Repossession

Mississippi residents with overwhelming medical bills, credit card debt and other expenses often miss mortgage payments. If you are out of work or underemployed, your lender might start foreclosure proceedings. Filing for bankruptcy before the sale may help you keep your home.

The American Bankruptcy Institute reports that an automatic stay is part of the bankruptcy proceedings and becomes active upon filing.

What are the benefits of an automatic stay?

An automatic stay is a court-ordered injunction. It protects your property and gives you a reprieve from creditors. Actions that pause when you file with the court include the following:

  • Collection attempts
  • Utility disconnection
  • Eviction
  • Wage garnishment
  • Vehicle repossession
  • Collection of benefit overpayments

While the automatic stay does not wipe out debt, it does let you get some breathing. If you qualify for Chapter 13, the plan could include payments that help you get caught up on your mortgage. During bankruptcy, you can apply for a mortgage modification. This process changes the terms of your loan. You might reduce monthly payments by adjusting the interest rate and modifying other financial components.

What does the injunction permit?

This tool does not cover all legal issues regarding debt. Actions that an automatic stay allows include tax audits and related payment issues. You must also pay custody or support as agreed upon in divorce proceedings.

An automatic stay puts creditors on equal footing. The trustee assigned to your case by the court negotiates with debt collectors and arranges for payment. Yes, bankruptcy affects your credit, but it can also help you keep your house and get out of debt.