If you file for Chapter 7 bankruptcy in California, you may be entitled to an automatic stay of creditor activity. The automatic stay may prevent a creditor from foreclosing on a house, repossessing your car or seizing a bank account. Generally speaking, the stay remains in place for the entirety of your bankruptcy proceeding.
An automatic stay may prevent an eviction
Filing for Chapter 7 bankruptcy may put a stop to any lawsuits that are presently pending against you. This may also include any legal action taken by a landlord to evict you from a rental property. The delay may give you enough time to work out an alternate payment plan with your landlord or make other arrangements to avoid an eviction.
However, it’s worth noting that the property owner may be able to get a stay lifted relatively quickly, which would allow for eviction proceedings to resume. This is because you don’t have an ownership interest in the property. Therefore, creditors generally won’t care what happens to it.
Creditors can’t take assets with minimal equity in them
You are generally entitled to a portion of the positive equity in your home, car or other assets. Creditors generally won’t take action to ensure that they are liquidated to pay outstanding balances owed. Furthermore, creditors generally won’t come after personal items such as clothes, tools or other personal property that isn’t worth a lot of money.
An automatic stay may help to ensure that you retain important assets such as a car, home or business while a bankruptcy case is pending. This may provide you with the leverage needed to renegotiate the terms of a mortgage, car loan or other debt.