The Automatic Stay: Bankruptcy's Protection Against Debt Collectors
Bankruptcy's automatic stay is a legal provision that may protect you from collection actions from creditors when you file your bankruptcy case.
More specifically, the automatic stay prevents creditors of all kinds from attempting to collect on debts through any means, including over the phone, by mail or by garnishing your wages.
The bankruptcy automatic stay takes effect automatically when a bankruptcy petition is filed.
If you're ready to put bankruptcy's protections to work for you, fill out the below form to talk to a sponsoring bankruptcy lawyer for free.
When Does the Automatic Stay Take Effect?
In most cases, your creditors will be halted by the power of the automatic stay as soon as your petition is filed with the court.
The automatic stay typically continues to protect you as long as your bankruptcy case is pending, though circumstances could change the duration.
For those who file under Chapter 13 of the Bankruptcy Code, this could mean three to five years – the period during which you're making payments under your repayment plans.
For those who file for Chapter 7 bankruptcy, the automatic stay will likely protect you widely during the case itself (usually a period of about six months).
If creditors choose to disobey the terms of the automatic stay by attempting to collect on debts, they can face serious sanctions and penalties.
What Does the Automatic Stay Do?
Creditors come in all shapes and sizes, but the automatic stay is a one-size-fits-most kind of protection.
With the automatic stay in effect, you'll likely be safe from all of the following:
- Foreclosure: If your home is in danger of being seized by your lender, filing Chapter 13 bankruptcy may be able to prevent it or halt it temporarily, thanks to the automatic stay.
- Repossession: Car in danger of being seized? Filing bankruptcy may prevent creditors from taking your wheels away. This is only a temporary fix, though. Eventually, you'll have to either repay your lender or give up your car.
- Lawsuits: The automatic stay may instantly stop most lawsuits against you. Read on for some types of lawsuits that are immune to the automatic stay.
- Wage Garnishment: The automatic stay was designed to keep your wages safe from collectors. Even if an order for wage garnishment has already been entered, the automatic stay may prevent it from being enforced.
- Tax Levies: If you're in danger of having property seized by the IRS in exchange for tax debt or having the government issue a tax levy, you may be protected by the automatic stay. Keep in mind, though, that the automatic stay won't stop the IRS from auditing you and demanding that you pay your tax debts.
What Can't the Bankruptcy Automatic Stay Do?
Bankruptcy protection is strong – but it's not magical. You'll be responsible for certain obligations even if you do choose to file for bankruptcy. Those obligations may include:
- Support/Maintenance: If a paternity lawsuit or a lawsuit concerning child support or alimony (spousal maintenance) is currently pending, the automatic stay will probably not halt it. Such a lawsuit may be in place to determine, collect or modify these payments.
- Criminal Proceedings and Penalties: The automatic stay will likely not protect you from any pending criminal charges, nor will it release you from paying fines or penalties incurred because of a criminal conviction.
Talk to a Bankruptcy Lawyer for Free
If you're interested in learning how the automatic stay may apply to you, you can ask a bankruptcy lawyer practicing in your area.
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