One of the most powerful aspects of bankruptcy is the automatic stay . The automatic stay puts the brakes on aggressive creditors who want to seize your assets and income. With the automatic stay, creditors are prohibited from enforcing judgments, using wage garnishments , filing lawsuits, or in any way attempting to collect on the debts you owe.
When is the Bankruptcy Automatic Stay Lifted?
There are times when the creditor can get the bankruptcy court to lift the automatic stay.
- The debtor has no interest in the property the creditor is trying to seize. For example, if the debtor has already moved out of a house that they have no intention of trying to save in bankruptcy, the court may decide to lift the automatic stay to allow the creditor to foreclose and seize the property.
- If the debtor closes the bankruptcy case or fails to make payments in a Chapter 13 bankruptcy case, the creditor might request that the bankruptcy trustee lift automatic stay. If the automatic stay is lifted, the creditors could proceed with collection activity.
- The bankruptcy debtor has engaged in some bad faith act. If the debtor has filed the bankruptcy in bad faith the creditor may ask the bankruptcy trustee to life the automatic stay allowing them to commence collections activity against the debtor.
- The debtor's bankruptcy has been dismissed. If the debtor's bankruptcy has been dismissed, the automatic stay will be lifted and the debtor will be subjected to collections actions.
Have Any Questions About Bankruptcy? Let Us Know
If a debtor is facing challenges to their automatic stay, they need to work closely with their bankruptcy attorney to keep the automatic stay in place so they can protect their assets. If you have any questions about the bankruptcy automatic stay or the bankruptcy process feel free to contact us
today for a free consultation.