What You Should Know: ‘Automatic Stay’

Posted by Wesley Scott on May 21, 2019 at 9:00 AM
Wesley Scott

stop aggressive creditors in their tracksOne of the most important terms and concepts for debtors during bankruptcy is “automatic stay.” The automatic stay is a big old stop sign between you and your creditors. For either a Chapter 7 or a Chapter 13, from the time of filing to the time of discharge the automatic stay stops creditors from collecting on your debts with them.

Why is this important to you?

Those hounding creditor calls stop.

Those nasty collections letters stop.

Those debilitating wage garnishments stop.

That impending foreclosure stops.

That angry lawsuit stops.

Between filing and discharge your creditors can no longer contact you in an attempt to collect on your debts. There are a few exceptions to this: family support payments, taxes that you may owe, or court proceedings that are already in the works (such as divorce or child support).

Creditors can file a motion to lift the automatic stay which, if granted by the courts, can allow them to start collection proceedings again. If this happens, you will be notified of the proceedings and have the chance to object and the matter will go to court. Your bankruptcy attorney can help you through the process.

Creditors who attempt to lift the automatic stay are usually home or auto lenders when the debtor has fallen behind on payments.

The automatic stay isn’t indefinite or without exceptions but it allows you to take a breath, find your feet under you, and come up with a game plan. The automatic stay can be invaluable peace of mind for debtors –as it should be!

Conclusion

If you’ve got questions about automatic stays or other bankruptcy lingo, visit www.kainscott.com to browse valuable resources, chat with a Kain & Scott team member, or set up a bankruptcy consultation.

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