When you file either a Chapter 13 or Chapter 7 bankruptcy, the court immediately issues an order called the “automatic stay”. The automatic stay forces your creditors to cease their collection efforts immediately. If your home is scheduled for a foreclosure sale, the sale will be legally halted while the bankruptcy is pending, which is generally two to three months.
However, there are exceptions to the rule:
For example, if the lender attains the bankruptcy court’s permission to go ahead with the sale by filing a “motion for relief from stay” you may not get the entire three to four months. Even after that point however, the bankruptcy will generally postpone the sale by at least two months, or possibly more if the lender is slow in obtaining the motion for relief from stay.
An automatic stay can immediately put a stop to creditors taking action against you in an attempt to collect on the owed debt. An automatic stay can prevent any of the following:
- Car Repossession
- Foreclosure of Your Home
- Harassing Creditors
- Utility shutoffs
- Wage Garnishment