One of the most important protections available to individuals who file for bankruptcy is the automatic stay. As the name suggests, it automatically goes into effect the moment a consumer bankruptcy case is filed, without the need for a court order.
The automatic stay immediately stops most creditor actions, including collection calls, lawsuits, wage garnishments, foreclosures, repossessions, and bank account levies. It essentially presses pause on the financial pressure a debtor is facing, giving them breathing room while the bankruptcy case moves forward.
However, the automatic stay stops not every action. Certain proceedings, such as criminal cases, child support and alimony matters, and some tax-related actions, can continue despite the bankruptcy filing. In addition, creditors may ask the bankruptcy court for permission to resume specific actions, such as foreclosure or repossession, by requesting relief from the stay. Although this may be the case for a few cases, there are always options you can explore, and every case is different! Talking to an attorney can help you determine your specific case.
The duration of the automatic stay depends on the type of bankruptcy filed. In Chapter 7 cases, it generally lasts until the case is closed or a discharge is granted. In Chapter 13 cases, the stay can remain in place throughout the repayment plan. However, repeat bankruptcy filings can limit or even eliminate this protection.
Creditors who knowingly violate the automatic stay may face serious consequences, including court sanctions, damages, and attorney’s fees.
The automatic stay is one of the most powerful benefits of consumer bankruptcy. By immediately stopping most collection activity, it allows debtors to regain control of their financial situation and work toward a fresh start.
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If you are ready to explore your options bankruptcy options, reach out to Minnesota’s kindest and most helpful bankruptcy law firm at www.lifebacklaw.com. Schedule your free consultation today and start the journey to financial freedom. We even offer a credit repair program to get you back on track!
