New Jersey residents facing financial difficulties and considering bankruptcy can benefit from knowing about something called an automatic stay. An automatic stay takes effect immediately upon filing for bankruptcy. There are no hearings or signatures required.

Automatic stays are designed to protect individuals from creditors or bill collectors. Creditor lawsuits are immediately halted, giving the debtor a little breathing room to focus on completing their bankruptcy case. It is not necessary for creditors to know about the automatic stay for it to apply.

The automatic stay protects individuals from harassment from creditors such as landlords and utility companies. Organizing a bankruptcy is easier knowing that in the meantime, a place to live and necessary utilities are still available.

In most cases, evictions are temporarily halted during an automatic stay. Even if the landlord eventually prevails in court, a few extra weeks in your current home can give you the time you need to search for suitable replacement housing.

An automatic stay also prevents utility companies from turning off gas, water, heat, electric, and phone services for at least 20 days. Automatic stays can also assist with common debt problems like foreclosure, overpayments of public benefits and wage garnishments.

However, it is important to recognize that automatic stays are temporary. In some cases, creditors may even succeed in cancelling or modifying the stay. Since every case is unique, be sure to discuss these issues with your bankruptcy attorney before making any major decisions.

Source: FindLaw, “The Automatic Stay: Stopping Creditors with Bankruptcy.”