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. |
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