Tell Creditors to Stay Away from You!
The Automatic Stay in Bankruptcy and How It May Help You Regain Control
Regardless of whether you are filing Chapter 7 bankruptcy to discharge your unsecured debts or Chapter 13 bankruptcy to keep your home or car and establish a repayment plan on your secured debts, you’ll be interested to know that when you file bankruptcy, an automatic stay kicks in.
What exactly is the automatic stay?
The automatic stay is a provision of bankruptcy law protecting you from most collection actions after filing bankruptcy, including debt collection, foreclosure, repossession, lawsuits and garnishments.
As its name suggests, the automatic stay tells your creditors to stay away from you during your bankruptcy case; in other words, it means that you may be hands off from most type of collection efforts, even if such efforts began before you filed bankruptcy.
Most people have found the automatic stay to be one of the most appealing and liberating aspects of filing bankruptcy, as it can essentially remove the hassle of having to deal with the late-night phone calls, threatening letters and other harassing efforts of debt collectors.
To learn what the automatic stay may do for you, read the rest of this page and get connected with a local bankruptcy lawyer by filling out the free form below or calling 888-632-0587.
What May the Automatic Stay Stop for You?
If you’re seriously considering filing bankruptcy, you’ll want to know what actions against you may be stopped by the automatic stay.
In most cases, the automatic stay may stop your:
If you are facing foreclosure and file Chapter 13 bankruptcy to keep your home, the automatic stay will kick in very shortly after your filing and may stop the foreclosure action, though this may not last for the duration of your case, depending on your circumstances.
If your car is in danger of being repossessed by angry creditors seeking payment of your overdue loan payments, filing Chapter 13 bankruptcy can prevent them from taking such action. You should know that under Chapter 13 bankruptcy, a repayment plan will be established in which you will have to pay off your late car payments over time. If you do not comply with the terms of your repayment plan, the automatic stay may be lifted and your car could be repossessed.
If the utility company is threatening to shut off your lights and gas, filing bankruptcy can prevent it from doing so. If your lights and gas have already been disconnected, the utility company may have to reconnect them after you file bankruptcy since the automatic stay prevents any further collection actions against you during your case. In some instances, the utility company may require a small deposit to turn back on your lights and gas – if you do not make the deposit, the lights and gas may potentially be left off after your bankruptcy filing.
If it has gotten to the point where your creditors are garnishing your wages as a result of your debts, take solace in the fact that the automatic stay can protect your paycheck. That’s right. You may be able to take home a full paycheck again. Of even more interest, if this debt leading to garnishment is dischargeable, you may have it forgiven (meaning that you will be able to eliminate it).
SOCIAL SECURITY INSURANCE/FOOD STAMPS/PUBLIC BENEFIT OVERPAYMENTS
An automatic stay can stop collections of public assistance overpayments by government agencies (if this applies to your situation), and this debt will most likely be discharged (eliminated) in bankruptcy, unless deemed that it was obtained through fraud.
If the Internal Revenue Service is threatening to issue a tax levy or seize your property in order to satisfy your debt, the automatic stay can prevent them from doing so. You should know that the automatic stay does not stop the IRS from auditing you and demanding that you file your tax returns, assessing your tax liability and demanding that you pay the assessment.
So What Can the Automatic Stay Not Stop?
While the automatic stay can prevent collection actions on many items, it may not stop any of the following:
CHILD SUPPORT & OTHER SUPPORT ACTIONS
If you owe child support or maintenance, the automatic stay cannot prevent collection of these debts. The automatic stay will also have no power in stopping paternity lawsuits. In many bankruptcy cases, satisfying debts to family (i.e. child support, alimony) will take precedence over other debts.
If you’ve been charged with a crime, the automatic stay cannot be used as a get-out-of-jail-free card. For example, if you’ve been charged with DUI, the automatic stay can do nothing to stop the state from charging you and imposing fines. However, if your criminal action is able to be separated into criminal and debt liabilities, the automatic stay may prevent a creditor from collecting on the underlying debt.
If you are filing bankruptcy and facing criminal charges like DUI, you should get in touch with a criminal defense attorney.
When Will the Automatic Stay Kick in for You?
If you make the decision to file bankruptcy, you will have to obtain the credit counseling briefing before you can file and then provide your bankruptcy lawyer with all of your information on your assets, income, expenses and debts (it’s important to make sure that you disclose all of this information and make sure that it is accurate).
Your bankruptcy lawyer will then use this information to prepare your bankruptcy petition. Once your petition is prepared, your bankruptcy lawyer will file it with your local bankruptcy court.
Upon your bankruptcy filing, a court-appointed trustee will enter the automatic stay court order, and all collection actions against you must stop.
In limited circumstances, the automatic stay may not come into immediate play upon your filing. In other situations, you may need your bankruptcy lawyer to file a motion to keep the automatic stay in effect.
To learn whether these exceptions may apply to you, be sure to get in touch with a local bankruptcy lawyer who can examine your situation in more detail and provide a better explanation.
How Long Will the Automatic Stay in Effect for You?
Generally speaking, the automatic stay will remain in effect for you until:
- your bankruptcy is complete and you receive a discharge;
- a bankruptcy judge lifts it at the request of a creditor (the automatic stay may be lifted if you do not meet your bankruptcy requirements); and
- the property you seek to protect is no longer part of the bankruptcy estate.
Let a Bankruptcy Lawyer Provide You with More Info about the Automatic Stay
Getting in touch with a local bankruptcy lawyer is a great way to get even more information about the automatic stay and to learn how it may apply more specifically to your situation.
At Bankruptcy.Me, it's easy to connect with a bankruptcy attorney near you. All you have to do is fill out this free bankruptcy case review form or call 888-632-0587 and we’ll help you get connected with a local bankruptcy lawyer.
The above synopsis of bankruptcy law is by no means all-inclusive and is not intended to provide legal advice. These laws may have changed since our last update and there may be additional laws that apply in your situation. For the latest information on bankruptcy laws, please contact a local bankruptcy attorney in your area.