One of the greatest benefits of bankruptcy can be the imposition of the “automatic stay” immediately upon filing. An automatic stay is an injunction issued by the bankruptcy court that automatically stops (or stays) all adverse actions against you. This prohibits any of your creditors from beginning or continuing with any adverse against you from the moment the bankruptcy petition is filed, including foreclosures, repossessions, garnishments, levies, lawsuits and collection efforts. Upon filing a bankruptcy, the court will serve notice on your creditors of your pending bankruptcy and will then be barred from taking certain actions against you unless seeking and receiving approval from the bankruptcy court to do so.
This is one of the many reasons it is important to ensure that your bankruptcy petition is complete by including all current creditors, and why you should always review your petition prior to filing your bankruptcy. If you are contacted by a creditor or are worried about a certain action, such as a garnishment or levy, it is imperative that your attorney is aware of such actions, and of any improper contact made by a creditor.
