When you file for bankruptcy you are automatically protected by something called the Automatic Stay. The automatic stay protects all the property that is part of your bankruptcy estate meaning that in most circumstances creditors cannot pursue lawsuits against you, collections or garnishments. In most instances the Automatic Stay remains in place for the life of your bankruptcy (However if you have had a bankruptcy dismissed within one year of filing the bankruptcy the automatic stay lasts only 30 days. You must Motion the court to request an extension of the stay). Creditors can petition the court to lift the automatic stay as to a certain piece of property in your bankruptcy estate. If the stay is lifted the creditor can then pursue collection or repossession/foreclosure against you.

The Automatic stay will:

• Stop utility shutoffs
• Stop most lawsuits pending against you filed by a creditor
• Stop a pending foreclosure (though it may not stop foreclosure for good, if the bankruptcy plan does not propose to catch up on mortgage arrears the mortgage company may petition the court after the bankruptcy is filed to lift the stay and continue with foreclosure proceedings)
• Stop garnishment of your wages or bank account
• Stop or delay repossession of your car
• Stop IRS or other tax garnishments while the automatic stay is in place

The automatic stay will not:

• stop an eviction proceeding against you if the Landlord already has an Judgment for eviction before the bankruptcy is filed (unless you have the right to cure in which case you must file a certification with the court stating your right cure and you will only 30 days to bring your rent current)
• stop wage garnishments for child support or alimony obligations
• In most circumstances it will not stop wage deductions to repay retirement loans

If you have questions about filing for Bankruptcy in Michigan, contact our Detroit Bankruptcy Attorneys today to schedule a free consultation.