How does filing a Chapter 7 petition keep creditors away?
Immediately after a Chapter 7 filing, the Court notifies creditors of the petition and, upon receipt of this notice by creditors, an “automatic stay” takes effect pursuant to 11 U.S.C. 362. The stay prevents creditors listed in the petition from taking action to collect debt or otherwise enforcing their rights. Prohibited conduct includes making phone calls, sending collection letters, filing a lawsuit, pursuing a lawsuit in progress, repossessing property, garnishing wages, attaching bank accounts, evicting tenants, and foreclosing on real property. The automatic stay lasts for the duration of the bankruptcy unless the creditor has a basis for asking the court to lift the stay, and then files a motion that is granted by the Court. When the debtor is discharged at the end of the case, the automatic stay becomes, in effect, permanent.
