South Florida Bankruptcy Lawyer

Automatic Stay

In bankruptcy law an automatic stay is an automatic injunction that stops creditors from being able to collect on certain actions to collect debts from a debtor who has declared bankruptcy. The stay goes into effect the moment the bankruptcy petition is filed. It can expire to a certain extent if the debtor has a case dismissed in a case pending during the previous year.

How an Automatic Stay Benefits Debtors

Normally, individuals who receive public benefits and were overpaid have the overpayment taken out of their future checks. Having an automatic stay prevents this action. It does not, however, prevent the agency from denying or terminating benefits if the individual becomes ineligible for benefits.

Wage garnishments stop immediately once bankruptcy has been filed. This is important because employers, though they cannot fire an employee for one wage garnishment, can terminate an employee for multiple wage garnishments.

What it Will Not Prevent

Regardless of an automatic stay, the IRS can still audit an individual who has:

• Filed for bankruptcy
• Issued a tax deficiency notice
• Demanded a tax return
• Issued a tax assessment
• Demanded payment of such an assessment

However, the IRS is prevented from issuing a tax lien or seizing property or income. Lawsuits filed before or during the bankruptcy seeking to establish paternity, or establish, modify, or collect child support or alimony are not stopped by an automatic stay.

If you are facing a financial crisis and feel like you have exhausted all of your options, considering bankruptcy may be your first step in the right direction.

Speak with a South Florida Bankruptcy Lawyer

Contact the South Florida bankruptcy lawyers of Eric N. Klein & Associates, P.A. at 561.353.2800 for an initial consultation. We will discuss your current financial situation and how filing for bankruptcy can help you regain control of your life.