Filing for bankruptcy puts into effect an “Order for Relief” — known informally as the “automatic stay.” The automatic stay immediately stops most creditors from trying to collect what you owe them. So, at least temporarily, creditors cannot legally garnish your wages, empty your bank account, repossess your car, foreclose on your house or other property, or cut off your utility service or welfare benefits.

Before you get too excited it is important to know that creditors can ask the bankruptcy court to lift (remove) the Automatic Stay if the stay is not serving its intended purpose. For example, if you have no equity in your house, can’t pay your past-due mortgage bills, have no foreseeable way to make future home payments, and then file for bankruptcy a week before your house is to be sold in foreclosure, the bank/loan company will probably ask the bankruptcy court for permission to proceed with the foreclosure — and that permission will likely be granted. Sorry.

This is not to say that the automatic stay cannot provide valuable relief on a number of occasions. Here are some common examples:

• Wage Garnishments: Filing for bankruptcy stops any wage garnishments. Not only will you take home a full salary, but you might also be able to discharge the debt through your bankruptcy filing.
• Foreclosure: If your home mortgage in the midst of foreclosure, the automatic stay temporarily stops the proceedings. Note the word “temporarily”: usually, the creditors will be able to foreclose in the future if you are not able to pay your full regular mortgage payment.
• Utilities: If you’re behind on a utility bill and your water, electric, gas, or telephone service is under threat of disconnection, the automatic stay will keep your utilities on for least 20 days.
• Taxes: The automatic stay will stop the IRS from seizing or issuing a tax lien on your income or property.

On the other hand, the automatic stay won’t help you if you’re facing certain instances. Here are some common examples:

• Eviction: If your landlord already has a judgment of possession against you when you file for bankruptcy, the automatic stay won’t affect these eviction proceedings; the landlord can continue just as if you hadn’t filed for bankruptcy.
• Taxes: It will likely come as no surprise that even if you’re under an automatic stay, the IRS can issue you a tax-deficiency notice, demand a tax return, issue a tax assessment, or demand payment of an assessment.
• Support Actions: Automatic stay will not protect you if you’re under a lawsuit to establish paternity, or to establish, modify, or collect child support or alimony.