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.
Author: Kelly Roberts
Kelly Roberts is a business and bankruptcy attorney at Roberts Law, PLLC. She has been assisting debtors and creditors in the bankruptcy process since 2010. Kelly earned her Juris Doctorate from the University of Miami School of Law.
Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction or the jurisdiction applicable to your issue/matter. No information contained in this post should be construed as legal advice from Roberts Law, PLLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
