The Automatic Stay in Bankruptcy
What is an Automatic Stay & How Does it Work?
When you file for bankruptcy, something called the “automatic stay”
is put into place—effectively
stopping creditors in their tracks. Not only can the automatic stay protect you against lawsuits regarding
the debt that you owe, but it can also shield you from any further collection
efforts by creditors, collection agencies, or government entities.
Essentially, the automatic stay was designed to stop creditors from seizing
property that belongs to the bankruptcy estate, as well as any property
that is exempt by state or federal law. In most cases, its reach will
foreclosures, auto repossessions, wage garnishments, and debt collections, making it
a powerful tool for debtors.
With an automatic stay in place, creditors are prohibited from:
- Beginning or continuing a lawsuit
- Continuing their debt collection efforts
- Repossessing a debtor’s property
- Garnishing a debtor’s wages
- Foreclosing on a debtor’s home
How Long Will the Automatic Stay Protect Me?
Generally, the automatic stay will remain in effect for the duration of
your bankruptcy case. This means that, as long as you are involved in the
bankruptcy process, creditors cannot take action against you. However, this also
means that the automatic stay will be lifted once you have received a
discharge and your bankruptcy case is closed.
Could a Creditor Lift the Automatic Stay?
Although the automatic stay prohibits creditors from continuing their collection
efforts, there are certain circumstances under which a creditor could
ask the court to remove, or “lift,” the automatic stay. This
is typically true of a creditor has a lien on your property, although
any creditor has the right to request that an automatic stay be lifted.
Your creditor’s request to lift the automatic stay may be granted if:
- You have fallen behind on your car payments
- You have fallen behind on your mortgage payments
- You have not maintained home or auto insurance
- You have delayed debt repayment in Chapter 13
- You have continuously failed to pay your rent
What if a Creditor Violates the Automatic Stay?
If a creditor violates the automatic stay by continuing their collection
efforts, attempting to seize your property, or garnishing your wages,
they can be penalized by the court. Anyone who willfully violates the
stay in your bankruptcy case can be held liable for actual damages caused
by the violation and, in some cases, even punitive damages.
Call Allmand Law Firm, PLLC for More Information
Are you interested in filing for
Chapter 7 or
Chapter 13 bankruptcy in Texas? If so, please do not hesitate to speak with a Dallas
bankruptcy attorney at Allmand Law Firm, PLLC. As the largest bankruptcy
filing firm in the state, we have helped thousands of people find relief
from their debt. Now, we're ready to help you. Call today for the
help you need!
Call our bankruptcy lawyers in Dallas, TX for a