When a debtor (borrower) files for bankruptcy an automatic stay on collection activity will go into effect under bankruptcy law. The automatic stay requires all collection activity against the debtor to stop immediately. Creditors and collection agencies will not be able to pursue any collection actions. This even includes, wage garnishments and repossessions. If a creditor resumes collection while the stay is in effect you may be able to sue that creditor. Unless the debt qualifies for an automatic stay exception.
The automatic stay typically remains in effect from the time the bankruptcy petition is filed until the case is closed. The automatic stay is available under both Chapter 7 and Chapter 13 bankruptcy cased filed in Florida. However, not all debts are included in the automatic stay, bankruptcy law provides automatic stay exceptions. If you are thinking about filing for bankruptcy you should speak with a Tampa bankruptcy lawyer before taking any action. Many bankruptcy law firms in Tampa will offer a free initial consultation and can provide a debtor with valuable information.
Automatic Stay Exceptions
The automatic stay does not apply to all types of debts and collection activities, many forms will receive an automatic stay exception. A list of some of these automatic stay exceptions are below, for a more complete list see bankruptcy 11 USC §362 or contact a Tampa bankruptcy lawyer.
- Family support obligations: Many different forms of family support obligations will be qualify for an automatic stay exception. For instance, child support payments and child custody cases are all exempt from the stay.
- Criminal court cases: The automatic stay will not delay or cancel the beginning or continuation of a criminal case. Bankruptcy is intended to address a debtor’s financial distress, not criminal activity. However, if the criminal prosecution is primarily based on debt collection the automatic stay may be placed on the criminal case. For instance, if the criminal prosecution is based on the debtor writing a bad check the bankruptcy stay may be enforced in the criminal case. See In Re Dovell.
- Tax bills: Demands for tax returns, and for payment of taxes are eligible for an automatic stay exception. However, tax liens that would attach to property of the bankruptcy estate will not take effect unless the debt is ineligible for a discharge and the property is transferred out of the estate or revested in the debtor.
- License suspension: The automatic stay will not prevent the debtor from attempting to reinstate a driver’s license that was suspended for reasons related to debt collection. However, license suspensions related to criminal proceedings will not be stayed subject to the automatic stay. See In Re Games.
How to Avoid an Automatic Stay Exception
Even though a debt is listed in the statute as being eligible for an automatic stay exception, the debtor may still be able to convince a court to stay the collection action. Bankruptcy courts are courts of equity. Therefore, the judge should consider the fairness of the relief sought, as opposed to just the strict rules of law. Further, under Bankruptcy law 11 USC 105, the judge has authority to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of the law. The overriding principle behind bankruptcy is to give debtors a fresh start. In some cases, an automatic stay exception can frustrate the purpose of debtors achieving a fresh start.
Tampa Bankruptcy Law Firm
At Florida Law Advisers, P.A., the Tampa bankruptcy attorneys have years of experience helping people just like you to solve their financial problems. We understand that these are very difficult times and we are here to help. We have many options available that can help you successfully manage your debt and regain your financial health. The right course of action will depend on the unique circumstances of your case. To see which options may be available, contact us to schedule your consultation with a bankruptcy attorney in Tampa.