How To Use An Automatic Stay To Your Advantage

Filing for bankruptcy is a big deal. However, it can also help you get your finances in order and allow you to stay in your home. When you file for bankruptcy, the judge puts an automatic stay on your property and assets. This puts a pause on any lawsuits filed against you, specifically by creditors. The best way you can use the automatic stay in a bankruptcy case is to help you keep your home and avoid being evicted.

If you are renting:

If you are renting an apartment or a home, filing for bankruptcy will not help you stay in the home longer. The landlord can file a notice for eviction through the courts, and that will take precedence over your bankruptcy. It does not matter whether you filed for bankruptcy before the eviction notice or after. You will still have to leave the home. If facing eviction is the only financial problem you are having, it may not be in your best interest to file for bankruptcy. You should talk to a lawyer to see what is best in your situation.

If you have a mortgage:

An automatic stay does temporarily stop eviction and foreclosure proceedings on a home with a mortgage. If the mortgage is underwater, meaning you owe more money than the house is worth, or you do not have any equity built up in the home, the mortgage company will file a brief with the court asking for the stay to be lifted on the eviction and foreclosure process.

You have a chance to dispute this action if you are filing Chapter 13 bankruptcy instead of Chapter 7 bankruptcy. Chapter 7 is about liquidating your assets and paying off or writing off your debts. Chapter 13 bankruptcies are about paying off your debts so that you can keep your assets. In order for the judge to keep the stay on your home, you will need to prove that you have enough income that you will be able to pay the regular mortgage payments as well as extra income to pay the debts that are in arrears. Ask the judge for time to get your financial house in order so that you can meet your obligations. 

Stipulations to the Automatic Stay:

The bankruptcy court will help you come up with a plan with your mortgage company. However, there will be stipulations made through the court about your obligations, specifically in paying off the debt. If you are unable to meet these stipulations throughout their entire term, the mortgage company can file a motion to complete the foreclosure process and you may still lose the house. 

For more information, contact a bankruptcy lawyer like Michael D Hart PC.