When you file for bankruptcy, the “automatic stay” is put into place which effectively stopping creditors in their tracks. This is a United States bankruptcy code law that does not allow creditors or debt collection agencies to take action or file lawsuits against debtors. Not only can the automatic stay protect you against lawsuits regarding the debt that you owe, but it can also shield you from any further collection efforts by creditors, collection agencies, or government entities. In most cases, its reach will extend to foreclosures, auto repossessions, wage garnishments, and debt collections, making it a powerful tool for debtors.
With an automatic stay in place, creditors are prohibited from:
What if a Creditor Violates the Automatic Stay?
If a creditor violates the automatic stay by continuing their collection efforts, attempting to seize your property, or garnishing your wages, they can be penalized by the court. Anyone who willfully violates the stay in your bankruptcy case can be held liable for actual damages caused by the violation and, in some cases, even punitive damages.
How Long Will the Automatic Stay Protect Me?
Generally, the automatic stay will remain in effect for the duration of your bankruptcy case. This means that, as long as you are involved in the bankruptcy process, creditors cannot take action against you. However, this also means that the automatic stay will be lifted once you have received a discharge and your bankruptcy case is closed.
How Creditors Can Get Around the Automatic Stay
Usually, a creditor can get around the automatic stay by asking the bankruptcy court to remove ("lift") the stay, if it is not serving its intended purpose. For example, say you file for bankruptcy the day before your house is to be sold in foreclosure. You have no equity in the house, you can't pay your mortgage arrears, and you have no way of keeping the property. The foreclosing creditor is apt to go to court soon after you file for bankruptcy and ask for permission to proceed with the foreclosure -- and that permission is likely to be granted.
Call The Wibbenmeyer Law Firm, LLC for More Information
Stop credit harassment today! Contact a Bankruptcy Attorney at 636-724-3355 or visit www.bankruptcysolo.com to schedule a free consultation with a bankruptcy attorney and find out if you are eligible for bankruptcy. Call today to take your first step to a fresh start!
Brandee D. Iannelli
St. Charles and St. Louis Bankruptcy Attorney
St. Charles and St. Louis Missouri Bankruptcy Attorney