When a person files for either Chapter 7 or Chapter 13 bankruptcy, an immediate automatic stay takes effect pursuant to section 362 of the U.S. Bankruptcy Code.
What does that mean in plain-speak?
It means any collection efforts by a creditor, including garnishments and lawsuits, must stop. The stay provides protection from nearly all collection actions.
According to an experienced bankruptcy lawyer in Pasco County, the stay remains in place on a first bankruptcy petition until you are either discharged in bankruptcy or the bankruptcy action is dismissed.
What the Stay Cannot Do
The automatic bankruptcy stay operates as an injunction to relieve many of the financial and emotional burdens that come with creditors and collection agencies contacting you. Even foreclosure proceedings must be stopped.
Your Chapter 7 or Chapter 13 filing also includes a list of your creditors. All creditors on that list are notified of your bankruptcy petition.
Despite the protection of the automatic stay, there are a few things it won’t do. Paternity actions and petitions to set or collect child support cannot be stayed. Criminal actions won’t be stayed either, and if a sentence in a criminal case included payment of a fine, the law requires it to be paid. Tax deficiencies and loans from retirement plans are also unprotected.
Lifting the Automatic Stay
If a creditor wants to collect on a debt after an automatic stay has been imposed, that creditor must obtain permission from the bankruptcy court. Due process of law gives you an opportunity to object to lifting the stay. There are times when such motions are granted, and the creditor will be permitted to resume its collection efforts.
Debt can overwhelm perfectly reasonable people, especially when large medical bills are involved. If you’re contemplating a bankruptcy filing, contact a bankruptcy lawyer in Pasco County at our offices by calling 813-254-5696 to arrange for a free consultation and financial assessment.
You can also use our easy contact form at www.attorneyfortampabay.com. We’ll listen to you carefully and advise you whether a Chapter 7 or Chapter 13 bankruptcy is the right fit for you.
