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Posted by: Erik Clark
Those suffering from excessive debt are often being pursued by a host of different creditors. The constant collection calls and letters can be overwhelming.
The Bankruptcy Code’s automatic stay stops all creditors and collection activity in its tracks.
The automatic stay is one of THE biggest benefits of filing bankruptcy, if not the main reason people file. Not just to wipe away their debts.
So, just what is the automatic stay? That’s what this post is for. Read on to learn more but remember, if you’re considering filing for bankruptcy, do so with the expert advice of a qualified bankruptcy attorney, not the internet. Contact one of our member attorneys today for a free case evaluation.
Automatic Stay Explained
The automatic stay is created immediately upon the filing of your bankruptcy case, whether it be a Chapter 7 or a Chapter 13 case. The automatic stay is a one-page document that gets sent to creditors notifying them of your bankruptcy and prohibiting them from taking certain actions.
Per 11 U.S. Code § 362, the automatic stay goes into operation in the following instances:
- commencing or continuing a judicial, administrative or other proceeding against the debtor or recovering a claim against the debtor;
- enforcing a judgment before a bankruptcy;
- obtaining possession of any estate property or creating or enforcing a lien against that property;
- collecting, assessing or recovering a claim against the debtor;
- setoff of any debt owing to the debtor;
- commencing or continuing a proceeding regarding tax liability.
If you are being garnished, if your bank account is ready to be seized, if you are subject to a lawsuit or a foreclosure sheriff’s sale date, then the automatic stay is what you need to acquire immediately to stop those collection efforts.
The automatic stay is typically the most important piece of a bankruptcy case, and the desired result that someone wants immediately upon filing for bankruptcy. The automatic stay basically says to debtors’ creditors that a case has been filed, they have to stop collecting immediately, and they have to let the bankruptcy court administer the case whether it’s a Chapter 7 fresh start or a Chapter 13 bill consolidation through the court.
My Creditor Violated the Automatic Stay. Now What?
Your attorney will be able to prepare an automatic stay, which can then be sent to creditors via e-mail, fax and regular mail. Once the creditor receives the automatic stay, if they do anything in violation of that automatic stay, then that creditor can be held in contempt and sanctioned by the federal Bankruptcy Court.
Creditors do have the ability in certain circumstances to bring a motion to modify the automatic stay and remove that bankruptcy protection. We see this very often in a Chapter 13 bankruptcy case when the debtor is not making the proper payments to either the trustee or to the mortgage company. In those cases, the mortgage company’s attorney will file a motion to modify the automatic stay, which will remove the bankruptcy protection and allow the creditor to proceed against the collateral in any other non-bankruptcy remedies, such as state court remedies.
Hire an experienced bankruptcy attorney so that when your case is filed, the automatic stay is created and proof of the automatic stay is sent to the creditors to get them to stop collecting.
Get Started with Your Bankruptcy Case Today
If you are being sued by a collector, your wages are being garnished, or your house is being foreclosed, the quickest way you can end all these actions and experience immediate relief is through the automatic stay. Filing for bankruptcy can be taboo, but it has several benefits. People who file a bankruptcy will pay pennies on the dollar on their debt and be placed on the right financial path for the future.
At National Bankruptcy Forum, we have several member attorneys who are qualified to handle your bankruptcy case, no matter how complex. He or she will help guide you on if a bankruptcy is right for you. Contact a member attorney today for a free case evaluation.
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- Are You Judgment Proof?
- Do I Need to Pay My Mortgage if I File Bankruptcy?
- “Friendly” Creditor Phone Calls and Emails Held to Violate the Bankruptcy Discharge
Erik Clark is one of the leading bankruptcy attorneys in Southern California who has had the privilege of representing thousands of clients in chapter 7 and chapter 13 bankruptcy cases in the Los Angeles area. Erik has served as the past President of the National Consumer Bankruptcy Litigation Center (NCBLC) and the American Consumer Bankruptcy College (ACBC). His firm, Borowitz & Clark, is committed to using bankruptcy law as a tool for social justice and was one of the first consumer law firms to join the Law Firm Antiracism Alliance.