People experiencing financial difficulties may find stability and refuge by filing for Chapter 7 bankruptcy. According to the website of the legal team at the Bradford Law Offices, LLC, bankruptcy allows individuals to continue with their normal day-to-day functions while realigning their finances at the same time.

Many understand that the one primary goal of Chapter 7 bankruptcy is to eliminate or discharge most of your unsecured debts. However, debt elimination is not the only purpose of bankruptcy filing. Many people file for bankruptcy to stop debtors, collection agencies, and the government from their collection activities during your bankruptcy case, which means filers are able to protect their assets (ex. properties, income) from any action of a creditor. Furthermore, a Chapter 7 bankruptcy protects from lawsuit and other legal actions.

Depending on where you live, the automatic stay doctrine applies a bit differently in each state. That’s why it is so important to consult first with a Chapter 7 bankruptcy expert to know how this type of filing may benefit you. But generally, here are the things that automatic stay can do for you:

  • Protects your monthly salary from garnishments – Bankruptcy allows you to take home your wage in full, without any garnishments taken against you by your employer. However, there are a few exceptions. For instance, bankruptcy cannot protect you from garnishments related to child support and alimony.
  • Protects you from service shut-offs – When you file for bankruptcy, the automatic stay prevents utility companies from cutting or altering your service. However, utility companies may demand “adequate assurance” of future payment from the debtor within a period of twenty days after the date of your filing. Failing to do so would allow utility companies to shut off your services, so you should act within the 20-day pass.
  • Protects you from collection of overpaid public benefits – If you are receiving public benefits (ex. VA comp, pension, disability benefits) and have been overpaid, bankruptcy may protect you from any collection actions by the government.