Today’s Bankruptcy Alphabet term is A for Automatic Stay.
photo credit: h.koppdelaney
One of the most attractive things about bankruptcy is the feature known as the “Automatic Stay.” As I’ve said before, consider this analogy:
Before you file for bankruptcy you are exposed to the harassment of creditors and debt collectors. Think of that harassment as windy rain, hail, lightening and thunder pounding down on your head while you are standing outside with no umbrella and no rain coat. In this situation, you do not want one of those flimsy $3.00 umbrellas you can purchase off a cart as you exit the subway. It just won’t do. You need a “super umbrella,” one that won’t turn itself inside out with the first wind gust. In the thunderstorm that is your financial reality, the “Automatic Stay” is like the world’s most powerful umbrella. It can protect you and keep you dry no matter how bad the weather may be.
After you file for bankruptcy, this super umbrella will protect you from your creditors. And I don’t mean “after” as in after you file bankruptcy, get a court order and take a bunch of other steps. I mean “after” as in – as soon as I hit the “submit” button on my client’s bankruptcy filing, the Automatic Stay goes into ffect.
Believe me when I say that the power of the Automatic Stay is awesome in its scope. Regulated by 11 U.S.C. §362 of the Bankruptcy Code, this “super umbrella” will protect you from the following:
- Starting or continuing a legal action (aka lawsuit) against you 11U.S.C. §362(a)(1);
- Enforcing a judgment obtained against you before you filed for bankruptcy 11U.S.C. §362(a)(2)
- Exercising control over property of the estate (i.e. your property) 11U.S.C. §362(a)(3)
- Attempts to create or enforce a lien against property of the estate (i.e. your property) 11U.S.C. §362(a)(4) & (5)
- Attempts to collect pre-bankruptcy filing debts 11U.S.C. §362(a)(6)
And more.
To put it simply, when the Automatic Stay is in effect, your creditors can’t contact you unless and until they get permission to do so from the bankruptcy court. Which means that before a creditor can contact you they must get permission from the bankruptcy court.
If you file Chapter 7, the Automatic Stay only keeps one person dry from that financial rain storm. That person is the individual who actually filed for bankruptcy protection. This very different from the Automatic Stay that one gets in a Chapter 13 filing. In Chapter 13 the Automatic Stay keeps you and other people who are obligated to repay your bills (i.e. a co-signer) out of that financial hurricane. For people facing foreclosure proceedings or for those who want to keep assets that others co-signed on, this is especially important and may determine which chapter of bankruptcy you end up using.
The benefits of the Automatic Stay cannot be overstated. While it will not protect you in all situations (i.e. if you are facing criminal charges, child support enforcement actions, retirement account loan repayments, etc.), it is truly one of the most attractive elements to the bankruptcy process. The Automatic Stay is often what people are thinking about when they consider the overall benefits of bankruptcy. The powers of the Automatic Stay tend to be what allow you to sleep better at night, to stop worrying yourself into a panic and to start dreaming about your future again.
So today’s bankruptcy alphabet term is brought to you by the letter A. if you are facing a financial storm, consider the benefits of what the Automatic Stay could do for you. Speak with a knowledgeable bankruptcy or consumer rights attorney to see if this “umbrella” would help you escape your financial turmoil.
Print
email
PDF
Twitter
Google Buzz
Facebook
Digg
del.icio.us
Liked This Post? Then You Should Check Out These Too!:
