One of the benefits of filing for bankruptcy is the Automatic Stay that goes into effect. It is one of the most powerful aspects of any bankruptcy filing. But what is the Automatic Stay? What does it mean? And why should you care?
When I first started practicing law, the phrase Automatic Stay seemed odd to me. When I think of stay, I think of a command you give to your dog “to stay”. It didn’t occur to me that the word ‘stay’ could be used as a noun in the way that it is used in the Bankruptcy context.
However, the Automatic Stay is a federal injunction that prevents the places and companies that you owe money from taking certain actions against you. They are required to stop or halt any actions or attempts to collect a debt. Creditors that you owe are not allowed to call you anymore, send bills, repossess your assets, garnish your wages or bank account, file or continue lawsuits against you or proceed with foreclosure on your house.
There are certain debts where this stay does not apply. These debts typically include actions related to establish or enforce child support or custody, certain criminal proceedings, perfecting a lien against your property, cashing of certain checks, getting new student loans, payment on 401k loans. There are many others, so make sure you consult with your bankruptcy attorney.
The stay happens immediately upon the filing of your bankruptcy case. When you file for bankruptcy protection, the bankruptcy stay automatically goes into effect. It applies even if the creditor has no knowledge of the bankruptcy. Think about it this way: if your auto lender repossesses your car after you file for bankruptcy protection, they will have to return the car, even if at the time they took the car they didn’t know about the bankruptcy. The bankruptcy protection is automatic and absolute once your case is filed.
The stay requires that all of your creditors deal with you on a level playing field under the bankruptcy rules. Creditors MUST seek and get court permission to continue to pursue certain actions. Any creditor who ignores the rules does so at its own peril and may be fined or even sanctioned by the Judge for violating your automatic stay. The protection starts the moment you file for bankruptcy. It is one of the most useful tools that will help you achieve the fresh start that you deserve.
If you are struggling to pay your debts and concerned about the future welfare for you and your family, it is important that you seek the advice of a bankruptcy lawyer to ensure that your assets are protected and the debts you seek to eliminate are dischargeable. Our attorneys have been assisting consumers and business owners with bankruptcy matters for over 25 years. If you are considering filing for bankruptcy, please consider contacting the Nomberg Law Firm. Our office number is 205-882-5005.
Steven D. Altmann has been a lawyer for more than 25 years. Steve has earned an AV rating from Martindale-Hubbell’s peer-review rating and was recently named a Super Lawyer and Top Attorney by Birmingham Magazine in the area of Bankruptcy Law.
We are a Federal Debt Relief Agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.