The New York Bankruptcy Automatic Stay Clause goes into effect once you file for either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. The Automatic Stay prohibits creditors from engaging in any collection activities including:
- Wage garnishments. If a creditor has a judgment against to garnish your wages, the New York Bankruptcy Automatic Stay prevent the money owed to your creditor from being deducted directly from your paycheck.
- Foreclosure. For those Chapter 13 bankruptcy filers who have received notice of foreclosure, filing bankruptcy can give you an opportunity to to catch up on missed mortgage payments and allow you to save your home. The Automatic Stay will halt any foreclosure proceedings on your home.
- Repossession. If your vehicle is being repossessed as a result of missed payments, bankruptcy can help you get your vehicle back.
- Termination of utilities. The New York bankruptcy Automatic Stay clause requires utility service providers not to terminate any utility services.
- Lawsuits or judgments. Any pending lawsuits or judgements are strictly prohibited by the New York bankruptcy Automatic Stay Clause.
- Prevent Eviction. If your landlord has obtained a judgment after you have filed bankruptcy, then the Automatic Stay will prevent you from being evicted.
What The New York Bankruptcy Automatic Stay Can’t Prevent
Although the Automatic Stay is very powerful, there are instances where it will not be able to prevent collections activities for certain debt. These include:
- Some tax proceedings. The Automatic Stay does not prohibit the IRS from still carrying out audits, issue a tax deficiency notice, demand a tax return or demand payment on taxes. However, the Automatic Stay does prevent the IRS from seizing your property or income and issuing a tax lien.
- Loan from a pension. The Automatic Stay does not prevent money from being withheld directly from your paycheck to repay job related IRA’s and pensions.
- Domestic support actions. Any lawsuits against you seeking to collect child support or alimony will not be stopped by the Automatic Stay.
Also see: New York Bankruptcy Process