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Bill Collection, Phone Calls or Letters

Why is the Automatic Stay So Important
in My Bankruptcy Case


The instant you file Chapter 7 or Chapter 13 bankruptcy, something called the “automatic stay” goes into force.  With limited exception, the automatic stay protects you from all creditor actions.  You are protected by the stay even before your creditors know that you have filed.  Here are some examples about how the automatic stay works:

Tom filed his Chapter 13 case five minutes before his home is scheduled to be sold at foreclosure on the Hamilton County courthouse steps - the filing of his case made the sale void and the purchaser at auction may not take title
 
Stan was receiving collection phone calls day and night for months.  He met with us and decided to file Chapter 7.  The minute we filed electronically and got a case number, Stan was protected from phone calls.  Once the bill collectors were advised of the filing, they were legally required to stop calling.  Any bill collector who continues to call and who knows about the filing could be liable to Stan for money damages.
 
Tania had been served with two separate lawsuits last week.  After meeting with her Clark & Washington lawyer, Tania decided to file Chapter 7.  After we obtained a case number, we contacted the lawyer for the plaintiff to demand that he file a dismissal, which he did.
 
William had fallen behind on all of his bills, and was in danger of losing his car to repossession.  After we filed Chapter 13, William did not have to hide his car because the automatic stay protected him against the repo man.

Under the 2005 changes to the Bankruptcy Code, some of the rules dealing with the automatic stay were changed as well.  Specifically, the automatic stay may not apply in re-filed cases and it may not work to stop certain creditors (i.e., some creditors in domestic relations cases).

You can read more about the automatic stay
on the Bankruptcy Law Network blog.