Instant, automatic protection from your creditors
When you file a bankruptcy petition, the automatic stay goes into effect IMMEDIATELY. This is created by 11 U.S.C. 362, and halt all efforts by creditors to continue collections efforts for any debt against you. This includes lawsuits, wage garnishment, foreclosures, repossessions of vehicles, bank levies, and also forces creditors to stop contacting you on the phone or my mail as well. It’s effect is immediate, and applies to all of your creditors.
If you case is successful and a discharge order entered, the automatic stay is converted into what is called a permanent injunction. That means your creditors are forever barred from seeking to collect any of the debts that have been discharged.
Exceptions to the automatic stay
There are some important exceptions to the automatic stay. It does not stop criminal prosecutions, family law cases such as divorce, some kinds of tax audits, and will not stop an eviction if your landlord has already completed the eviction process.
Also, secured creditors can ask the court for relief from the automatic stay. If you have a car loan or home loan, and you are not making payments, the creditor will file a motion with the court called a “Motion for Relief from Stay” so that they can get permission to repossess the vehicle or foreclose on the house. If you are current on the payments, and stay current, you have nothing to worry about. For house payments, if you are significantly behind in the monthly payments, then you can enter a repayment plan lasting up to five years under Chapter 13.
Violations of the automatic stay
Some creditors will keep coming after you even with the automatic stay. If they do this, then I will file an action against them for any damage you suffered, as well as attorneys fees, costs, and possible punitive damages. It is relatively uncommon, and if this happens, I will represent you in taking care of this problem.
Also, any action a creditor takes in violation of the stay is automatically void. If you file for bankruptcy, and the bank repossesses your car a week later, we will sue them to get it back. The same is true for foreclosures, wage garnishments, and most other collections efforts.
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