1. Home
  2.  | 
  3. blog
  4.  | How soon does a bankruptcy filing stop creditors or an eviction?

How soon does a bankruptcy filing stop creditors or an eviction?

On Behalf of | Nov 15, 2021 | blog, Personal Bankruptcy

When you file a bankruptcy petition, the federal court issues an injunction known as an automatic stay. As reported by U.S. News, creditors and collection agencies cannot contact you for payments.

When submitting your first petition, the automatic stay goes into effect immediately and lasts until your case closes. Filing two petitions within a year could result in an injunction lasting for only 30 days. The court will not, however, issue an automatic stay if you file a third petition in one year.

How could creditors react to an automatic stay?

Holders of your unsecured debts, such as credit card and medical bills, typically stop making contact once they receive notice of an automatic stay. You might find fewer collection letters in the mail and not receive as many phone calls.

A mortgage lender threatening to foreclose must refrain from filing a lawsuit to begin the process.

If you have fallen behind on car loan payments, your lender may not repossess your vehicle. A vehicle loan agent might, however, offer to work out a new payment arrangement.

How does bankruptcy affect a lease agreement?

A bankruptcy petition may not protect you from an existing lease agreement. Your landlord could request the court to lift the automatic stay, as noted on the Judicial Council of California’s website.

Once the court removes the stay, the property’s owner may evict you for falling behind on rent or damaging the rental unit. If your rent is current, however, the court can decide whether you could continue to afford to pay the monthly amount after bankruptcy, as noted by SFGate.com.

Bankruptcy offers protection from creditors and could assist you in remaining in your home. A petition, however, does not discharge past-due taxes and court-ordered financial support. Even with an automatic stay, you must continue to meet these obligations.