THE AUTOMATIC STAY PROTECTION START WHEN THE CASE IF FILED
The automatic stay is a prohibitive injunction that prevents collection efforts by creditors after the filing of a bankruptcy case. In plain English, this stay legally prevents creditors from calling, mailing, taking money out of a bank account, garnishments of paychecks, filing or continuing a lawsuit, or otherwise making proactive efforts to collect a debt from the debtor aka the person that filed the bankruptcy. This automatic stay gives the debtor breathing room to make decisions about finances and allows for agreements to be made with certain creditors to keep property.
For the most part, when a bankruptcy is filed, a creditor must stop everything it is doing to collect the debt to avoid monetary sanctions for violation of the bankruptcy stay.
EXCEPTIONS TO THE AUTOMATIC STAY
It is important to note that there are exceptions to the automatic stay where proceedings will not stop based on the filing of a bankruptcy:
- Criminal proceedings;
- Tax Audits;
- Some family court proceedings, such as proceedings involving establishment (or modify) alimony or child support, child custody or visitation, granting a divorce, or domestic violence; or
- The stay may not go into place or be limited to the first 30 days if there are multiple bankruptcy filings that give rise to the presumption that the case if filed in bad faith. Filing a case in bad faith means using the bankruptcy to hinder, delay or harass a creditor without the intent to do what is needed to move the case to completion.
WHEN THE AUTOMATIC STAY TERMINATES
The bankruptcy stay will terminate, or end, when the bankruptcy is over whether that is because the case was dismissed (not finished and canceled) or discharged (completed successfully). A creditor can also file a motion with the court to lift the stay and allow the creditor to resume collection efforts, this motion is called a Motion for Relief from Stay.
For more information about the bankruptcy procedures and timelines, please contact me using the contact form below.
