Once a bankruptcy has been filed with the Court an automatic stay is placed on all collection efforts. This means that collectors, such as creditors, government agencies, and collection agencies, are no longer allowed to take any actions in an attempt to collect on debts which is up to and including filing lawsuits. The automatic stay is an effective tool that can be used by debtors and is part of the United States bankruptcy code. The automatic stay can prevent housing foreclosures, garnishments, debt collections, and repossessions.
Prohibited Actions From An Automatic Stay
• Eviction – An automatic stay may help prevent an eviction.
• Foreclosure – While this may be temporary, an automatic stay can prevent a foreclosure.
• Wage garnishments – Collectors are unable to garnish wages due to the automatic stay.
Consequences of Violating the Automatic Stay
The Bankruptcy Court can penalize a collector who chooses to violate the automatic stay by not ceasing their collection activities, such as repossession or garnishments. These penalties can be from actual damages or punitive damages.
Length of the Automatic Stay
The automatic stay will not expire until the bankruptcy has been discharged and the case has been closed.
Exemptions for the Automatic Stay
Once an automatic stay has been entered, a creditor can petition the Court to lift it in some circumstances. If the Court is given a valid reason for lifting the automatic stay, such as you will be unable to pay your mortgage in order to keep the property, the Court will likely grant the lifting of the stay and allow the property to be foreclosed on and sold.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.