As soon as a bankruptcy petition is filed, bill collectors have to leave you alone. For almost anyone who has gone through bankruptcy before, the term "automatic stay" is music to their ears. An automatic stay is an injunction by a court which stops (stays) creditors from trying to collect debts from anyone who has declared bankruptcy.
Section 362 of the United States Bankruptcy Code says that the stay starts as soon as a bankruptcy petition is filed. However, the courts do not have to contact your creditors until ten days after the petition is filed. This means, as soon as your petition is filed, that you should contact any creditors that have been harassing or threatening action against you and let them know that your automatic stay is in place.
Another few things that an automatic stay stops are foreclosures , collection calls , wage garnishments , and any cases where you are being sued. In the case of a foreclosure sale, if your house is about to be sold, you need to show up and bring the paper work from your bankruptcy to make it abundantly clear that your automatic stay has started. Also, in regards to wage garnishments, it may not be something that you want to do, but if you are having money garnished from your paycheck, you need to contact your employer to let them know you have filed a bankruptcy petition. This will help get the garnishments stopped as soon as possible. Of course, the easier and better solution is to have your bankruptcy attorney handle these things for you.
Another magnificent thing about an automatic stay is that violators of the automatic stay can be held liable for damages. Most creditors are well aware of the trouble that they can get in, so they do not dare violate the terms of an automatic stay. In a case where someone does violate the stay, damages include attorney fees incurred when you are dealing with automatic stay violation.
Of course there are a few exceptions to an automatic stay, and you at least need to know the most common of them. In most cases there will be no relief for child support or alimony payments. In Chapter 7 bankruptcy you will not see any relief for support payments even after discharge, but in Chapter 13 you are sometimes allowed to make a more manageable plan to pay back your accrued support. Regardless, the automatic stay usually does not provide relief for any support payments.
Also, criminal proceedings are not stopped by an automatic stay. This one seems self explanatory. "Do the crime, you do the time."
In most circumstances an automatic stay will not protect a cosigner. That is unless you are filing for Chapter 13, and you have stated that you're going pay off the balance in full. This special circumstance is called co-debtor stay. Anyway, if you have fallen behind on any payments, an automatic stay will be a great relief for you. There will be no more harassment, and you will be given the opportunity to get your finances back in order. If you would like to learn more, please contact a Dallas-Fort Worth bankruptcy attorney.