Twitter
Facebook
The Automatic Stay in Bankruptcy
Although each bankruptcy chapter differs from the others in significant ways, the automatic stay is common to all bankruptcy cases.
What is an Automatic Stay in Bankruptcy ?
The filing of a bankruptcy petition automatically stays (holds off or stops) most actions against the debtor or the debtor’s property. Creditors normally receive notice of the filing of the petition from the clerk. The stay arises by operation of law (automatically) and requires no judicial action. As long as the stay is in effect, creditors generally cannot initiate or continue any lawsuits, garnish wages, or make telephone calls demanding payments. The automatic stay provides a period of time in which all judgments, collection activities, foreclosures, and repossessions of property are suspended and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition. The stay provides a breathing spell for the debtor, during which time negotiations can take place to try to resolve the difficulties in the debtor’s financial situation.
The automatic stay is the bankruptcy law’s most powerful provision available to a debtor. For a debtor facing repossession of a vehicle, foreclosure of a home or business, harassment by creditors, or creditor lawsuits, the immediate relief of the automatic stay protects the debtor so that he or she will have an opportunity to restructure their debt without losing their property.
Tags: automatic stay, bankruptcy, bankruptcy cases, bankruptcy chapter, bankruptcy law, bankruptcy petition, foreclosures, fort worth bankruptcy attorney, repossession