Protection from Creditors
Nov 25, 2024
What Is the Automatic Stay?
The Automatic Stay provides immediate and powerful protection from your creditors under the U.S. Bankruptcy Code. It is a court ordered injunction that prohibits creditors listed in your bankruptcy from starting or continuing their collection efforts against you. The Automatic Stay can do the following:
Stop Collection Calls and Collection Letters
Creditors must stop all collection efforts, including collection calls, collection letters and emails requesting payment.
Stop Wage Garnishments
Creditors must stop wage garnishments on money judgments from unpaid debts.
Stop Debt Collection Lawsuits
Creditors must stop legal proceedings for unpaid debts including credit cards, medical bills or personal loans.
Stop Utility Shut Off
Utilities companies cannot shut off your service due to an outstanding balance. However, your utility company may require a deposit for future services.
Stop Repossession
Creditors cannot repossess your vehicle while the automatic stay is in place. In Chapter 13 Bankruptcy, you can include missed car payments in the repayment plan and keep your vehicle.
Stop Foreclosure
Creditors must stop foreclosure proceedings while the automatic stay is in place. In Chapter 13 Bankruptcy, you can include missed mortgage payments in the repayment plan and keep your home.
Length of Automatic Stay
In both Chapter 7 and Chapter 13 Bankruptcy, the automatic stay begins immediately upon filing and can last for the entire duration of your case. A Chapter 7 bankruptcy is typically open for approximately 4 months. A Chapter 13 bankruptcy can be open for 36 to 60 months depending on your repayment plan. In a Chapter 7 bankruptcy the automatic stay’s protection against foreclosure and repossession will only be temporary. If you are behind on mortgage or vehicle payments, these secured creditors can petition the court to lift the automatic stay. Chapter 13 Bankruptcy provides a more lasting solution to stop foreclosure and repossession. It includes a 36 to 60-month repayment plan for overdue secured debts, such as mortgages and car loans. As long as you keep up with the necessary payments, the protection of the automatic stay remains and prevents foreclosure and repossession.
Exceptions to Automatic Stay
The automatic stay provides significant protection and relief, however, there are some limitations and exceptions. Some common exceptions include:
Certain Debts
Obligations like child support, alimony, and certain taxes are not covered by the automatic stay.
Multiple Filings
If you file for bankruptcy multiple times within a short period, the automatic stay can be limited or not go into effect at all.
Lifted Stay
Secured creditors can petition the court to lift the automatic stay. If they can prove to the court there is inadequate protection or your failure to make necessary payments, the automatic stay can be removed or modified.
FREE CONSULTATIONS
Being harassed by your creditors makes a difficult situation even worse. Filing for bankruptcy can give you the debt relief you need and put an end to creditor harassment. At Pedersen Law Office, LLC we understand how stressful being in debt can be; that is why we offer free consultations. We will discuss your circumstances and goals and help figure out what option is best for you and help you through the entire process. Our law office serves the communities of Appleton, Neenah, Menasha, Oshkosh, Green Bay and their surrounding areas.
