Bankruptcy Automatic Stay

The filing of a bankruptcy case, under any chapter of the Bankruptcy Code, triggers an automatic stay which is one of the fundamental debtor protections provided by the bankruptcy laws. The automatic stay gives the debtor protection from his creditors, subject to the oversight of the bankruptcy judge, and brings all of the debtor's assets and creditors into the same forum, the bankruptcy court, where the rights of all concerned can be addressed.

The Automatic Stay Can Stop Creditors From:

• Foreclosing on your house
• Repossessing your car
• Beginning or continuing law suits
• Collection calls
• Garnishing your wages
• Disconnecting your utilities
• Evicting you from your home (if there is no writ of possession)
• Refusing to issue a transcript of your schooling
• Canceling your driver's license
• Filing a "financing statement" to perfect a security interest

The Automatic Stay Remains in Effect Until:

• a judge lifts the stay at the request of a creditor;
• the debtor gets a discharge; or
• the item of property is no longer property of the estate.

Thus in Chapter 7, the stay may prevent immediate foreclosure on a home, but the stay will expire, and the creditor will be able to proceed when the debtor gets a discharge. In Chapter 13, the stay should remain in effect for the life of the Chapter 13 plan.

The Automatic Stay Does Not Stop the Following:

• Criminal proceedings
• repaying a loan from certain types of pensions
• actions to suspend driver's licenses and revoke professional licenses
• paternity proceedings
• Actions for a family support order or the modification of such order
• Actions to collect support from property that is not property of the estate
• Tax audit, demand for tax returns or assessment of tax (collection of tax is still stayed: the tax authorities, to their chagrin, are subject to the stay, just like other creditors)

Violations Of The Automatic Stay

Anyone who willfully violates the stay in the case of an individual is liable for actual damages caused by the violation and sometimes for punitive damages. Since the court usually takes several days to several weeks to mail creditors notice of the bankruptcy, it is incumbent on the debtor or debtor's counsel to give actual notice to creditors who might take action without knowledge of the stay. Creditor actions taken after the stay is in place are generally void or voidable: that is, any action the creditor takes in violation of the stay has no legal effect.

Contact Us About The Bankruptcy Automatic Stay

Contact StraightBankruptcy.org to have your situation evaluated by an experienced bankruptcy attorney. At StraightBankruptcy, our sponsoring attorneys usually maintain office hours six days a week and can meet with you in evenings or weekends. Flexible payment plans are available.