When a debtor files for bankruptcy, an automatic stay begins the moment after filing. What is the automatic stay? The automatic stay in bankruptcy is an automatic injunction that halts and prevents many actions of creditors against the debtor, with certain exceptions.
Section 362 of the United States Bankruptcy Code provides that the stay begins immediately upon filing of the bankruptcy. The stay stops or freezes many forms of creditor action against the debtor.B Some of the actions the automatic stay holds in abeyance are:
- initiating or continuing judicial proceedings against the debtor;
- actions to obtain the debtor’s property;
- actions to create, perfect or enforce a lien against the debtor’s property;
- set-off of indebtedness owed to the debtor before commencement of the bankruptcy proceeding.
This includes but is not limited to:
- filing or continuing civil lawsuits for debts;
- placing or continuing with a garnishment on wages;
- garnishing bank accounts;
- foreclosure proceedings (both judicial and non-judicial foreclosures);
- repossessing property such as your car (if bankruptcy filed before car is repossessed!);
- collection phone calls, collection letters, or harassing the debtor at work or home.
A court may grant a creditor relief from the stay if the creditor files the appropriate pleadings with the bankruptcy court and can show that the stay does not give the creditor “adequate protection” or the stay jeopardizes the creditor’s interest in certain property that is collateral for a debt.B However, the bankruptcy court does not always grant the relief from stay, it may not be granted immediately, and can be disputed by the debtor’s attorney.
We encourage anyone interested in finding out if bankruptcy in Missouri or Kansas can help them with debt related problems to call us for our free initial phone consultation. We welcome the opportunity to talk to you about the collection actions the automatic stay will prevent and additional exceptions to the stay that exist. Each debtor’s financial situation is unique and deserves the attention of an experience bankruptcy attorney.
The Sader Law Firm has helps families, individuals and businesses file for bankruptcy in Missouri and Kansas, so they can look forward to a brighter financial future.