What is the Automatic Stay?
The automatic stay is one of the most valuable functions of a bankruptcy proceeding for the debtor seeking relief from creditors. The automatic stay immediately stops any lawsuit filed against you and virtually all actions against your property by a creditor, collection agency or government entity and provides an injunction against the continuance of any action by any creditor against the debtor or the debtor’s property. The automatic stay prohibits: • Beginning or continuing law suits • Collection calls • Repossessions • Foreclosure sales • Garnishment or levies The automatic stay remains in effect until: • A judge lifts the stay at the request of a creditor; • The debtor gets a discharge; or • The item of property is no longer property of the estate. Essentially, an automatic stay means that upon filing the petition for bankruptcy, all creditors, including the IRS, collection agents and attorneys, etc, are restrained from trying to collect their debts, repossess property, or foreclos
The Automatic Stay is one of the fundamental debtor protections provided by the Bankruptcy Laws. Under the Bankruptcy Code (11 U.S.C. 362), the filing of a bankruptcy under any chapter of the Bankruptcy Code automatically triggers an injunction that prohibits most creditors from the commencement or continuation of any judicial, administrative, or other action or proceeding against the debtor that actually was commenced or could have been commenced.
The automatic stay is a rule that prevents any creditor from doing anything at all to enforce a claim against a debtor during the bankruptcy case. The granting of the stay depends on how many bankruptcies you have filed within 1 year. Some examples of actions by a creditor that would violate the stay are these: (1) Filing a new lawsuit, or continuing to press a lawsuit that had already been filed. (2) Sending dunning letters or making phone calls in an attempt to collect a debt. (3) Filing a financing statement to perfect a security interest. (4) Refusing to issue a transcript of your schooling. (5) Canceling your drivers license. Exceptions: Criminal prosecution, paternity proceedings, litigation to collect child support or alimony, repaying a loan from certain types of pensions, and IRS audits are not stopped. With residential real estate leases, landlords seeking to evict tenants are free to complete evictions if the landlord already has a judgment of possession or where the evictio
The automatic stay is your protection from your creditors once your bankruptcy case is filed. It prohibits creditors from taking action to collect money or property from the debtor. The creditor who wishes to take action against the debtor must obtain permission from the bankruptcy court after a hearing. A creditor who attempts to collect on a debt without getting this permission faces potential sanctions and claims for damages, including court costs and attorney’s fees, and, in some cases, punitive damages. If this happens to you, contact your Chicago Bankruptcy Network attorney immediately to discuss your options available.
