The instant bankruptcy is filed, for either Chapter 7 or Chapter 13, a protective umbrella called the automatic stay is triggered which protects the debtor and the debtor’s property against the continuance of any action by any creditor. For example, the automatic stay would protect and STOP a pending foreclosure. Additionally, when filing a Chapter 13 bankruptcy, that injunction extends to anyone else who is obligated to repay your debts.
However, the automatic stay is not absolute in that a creditor may restart collection proceedings by asking the court for permission.
Further, there are limits on how long the automatic stay lasts. For example:
What The Automatic Stay Covers
As long as the automatic stay remains in place, the following actions are prohibited:
In other words, the automatic stay is a central and very powerful tool a debtor can take advantage of once the bankruptcy is filed. The goal of any bankruptcy proceeding is to give the debtor a fresh start. The automatic stay allows for the debtor to be protected from all creditor claims while he gets his finances back in order.
What The Automatic Stay Does Not Cover
Unfortunately, not all actions and debts are covered by the automatic stay. The automatic stay does not stop:
If you are thinking of filing for bankruptcy it is always best to talk with an experienced attorney to discuss your individual case. The beauty of bankruptcy is that a debtor has many options to help resolve individual problems. Only an experienced bankruptcy lawyer can help guide you through this difficult and confusing process.
Randy M. Creighton, Esq.