The Automatic Stay

The Automatic Stay in bankruptcy is one of the fundamental debtor protections provided by the Bankruptcy Code. If creditors have been harassing you, this is the provision in the bankruptcy code that will give you immediate relief. Whether you are filing Chapter 13 or Chapter 7 bankruptcy, the Automatic Stay goes into effect immediately and automatically when you file for bankruptcy protection.  The automatic stay is a legal injunction that prohibits most creditors to stop taking legal action against you, and from even contacting you.

What Can Automatic Stay Do For You?

The Automatic Stay is a great tool for debtors because it serves to stop most contact and continuing collection activity from creditors on debts that are owed.  If you want to get creditors off your back, filing for bankruptcy and enacting the automatic stay is an effective means of doing so.  Once the automatic stay goes into effect, your creditors are not even allowed to call you or write you. Any communication they wish to have with you will have to go through your bankruptcy attorney.

In most situations, the automatic stay STOP:

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• Foreclosure
• Trustee Sale
• Repossession
• Wage garnishment or levies, even if garnishment orders are already in effect.
• Creditor lawsuits
• Creditor harassment
• IRS Collection Activity
• Any creditors (including collections agencies) from corresponding with you at all, including phone calls, letters, etc.

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There are certain exceptions in which the Automatic Stay in bankruptcy cannot help you. In most cases, the automatic stay remains in effect for the duration of the bankruptcy case. However, there are situations in which the automatic stay is limited or not enforced at all:

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• If you have filed for bankruptcy in the last year, and your case was dismissed, the automatic stay will only last for 30 days.
• If you have had more than one bankruptcy dismissed in the past year, it will not go into effect at all, unless you take the proper steps to protect you and your estate.
• Certain tax audit proceedings with the IRS.
• Support actions such as collection of child support or alimony.
• If you have co-debtors on certain debts, they are not afforded the same protections under the Automatic Stay that you are in Chapter 7. However, if you are filing for a Chapter 13 Bankruptcy, a creditor may not pursue a debt against a co-debtor or guarantor, if the debt is a “consumer debt,” which is defined as a debt incurred by a person primarily for personal, family, or household purposes.

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How long does the Automatic Stay last?

The Automatic Stay in bankruptcy is neither absolute nor permanent. For most chapter 7 and 13 cases however, it stays in effect until the debtor gets a discharge from his or her debt, the property in question is no longer a part of the estate, or a judge lifts the stay at the request of a creditor, who must file a Motion for Relief from the Automatic Stay.