What Is an Automatic Stay?

The owners of a landfill company filed for Chapter 11 for bankruptcy protection. The decision came in spite of the company receiving a multimillion-dollar contract from a client. However, the client was accused of withholding payment owed by the landfill owners. The owners claimed the non-payment caused them to file for bankruptcy.

The operation of the landfill will continue running while the Chapter 11 case is undergoing. However, it was quoted that, “With bankruptcy comes an automatic stay against new litigation,” by the owner’s representation. This means that a lawsuit cannot be filed against neither of the businesses until the business dispute is cleared.

Automatic Stay

Once an individual files for bankruptcy, he or she can reap the benefits of automatic stay. A helpful Washington DC Chapter 7 lawyer can assist you in preparing documents needed to begin filing for bankruptcy. Automatic stay is designed to give the court time to process the bankruptcy claim and allow the debtor time to rebuild their credit. A qualified Washington DC Chapter 11 attorney can also arrange for debtors to take credit counseling classes to help rebuild their credit. Below you will find other information about how automatic stay can help debtors by not allowing creditors to:

• Continue pressing for payment
• Contact the debtor
• Send collection notices
• Start or continue a lawsuit against the debtor
• Collect wages garnishments

A friendly Washington DC Chapter 11 attorney will be able to tell you ways automatic stay can benefit the debtor. Automatic stay can also stop utility, water, electric, gas or telephone service from being disconnected for at least 20 days or more. It can temporarily stop foreclosures from happening and collecting overpayments from public benefits including social security. It is wise to contact a Maryland Chapter 13 lawyer to learn about other benefits automatic stay can give to bankruptcy filers.

Other Information about Automatic Stay

Automatic stay is designed to give the debtor time to establish a repayment plan. A Maryland Chapter 13 lawyer can help you plan your repayment. However, there are instances in which an automatic stay will not help a debtor. Automatic stay will not stop the IRS from proceeding with action, stop child support or alimony. It also will not stop any criminal cases from proceeding nor stop money withheld from a paycheck due to an outstanding loan from certain pension accounts. It is important to contact a Washington DC Chapter 7 lawyer to find out more information about what automatic stay will not prevent.

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