When you file either Chapter 7 or 13, an “automatic stay” is put into place under bankruptcy law. The automatic stay requires all collection activity against the debtor to stop immediately. The automatic stay is the quickest way stop creditor’s phone calls and stop creditor harassment. Creditors and collection agencies will not be able to contact you, garnish your wages, or repossess your property while the automatic stay is in effect. This stay is applicable to all creditors and none of your creditors can repossess any of your property during the time the automatic stay is in place. See bankruptcy law 11 U.S.C. § 362(a).
How Long Does the Automatic Stay Last?
In most cases, the automatic stay will remain in effect and stop creditor harassment until your bankruptcy case is discharged. The automatic stay is available under both Chapter 7 and Chapter 13 bankruptcy. If you are unsure about which Chapter is right for you speak with a bankruptcy attorney in your area. Florida Law Advisers, P.A. offers a free initial consultation for bankruptcy clients, to speak with a bankruptcy lawyer in Tampa click here.
Although the automatic stay is usually in place during the life of your bankruptcy, it is automatically lifted as to all creditors once your case is closed out. See bankruptcy case Failla v. Citibank. For example, if you did choose to surrender your home, the secured creditor can start the foreclosure process on your home as soon as the stay is lifted at the end of your case without first having to seek approval from the bankruptcy court. However, the creditor will be unable to continue with the foreclosure process until the stay has been lifted.
Stop Creditor Harassment With The Automatic Stay
If a secured creditor wants to move forward with collection efforts after the stay has been enacted, the creditor must first seek approval to do so from the bankruptcy court. This process will require notice to you (the debtor) and a hearing. See U.S. Supreme Court Case: Citizens Bank of Maryland v. Strumpf.
If the judge grants the secured creditor the ability to move forward with their collection after the hearing, the automatic stay is considered to be “lifted” and the secured creditor can come after the piece of property that it wishes to repossess. An example of this process would be in a Chapter 7 where you choose to surrender your home. If the secured creditor wants to take your home from you, the creditor must go through the process of seeking approval from the court in order to do so. For more information about a creditor’s right to lift the automatic stay contact a bankruptcy lawyer in your area.
Automatic Stay Stops Foreclosure
If there is a foreclosure pending against your home prior to filing bankruptcy and you want to keep your home, filing a bankruptcy petition will automatically stop that foreclosure process because of the automatic stay. You want to make sure that once you file your bankruptcy petition to stop the foreclosure action that you also file a “Suggestion of Bankruptcy” form in the state court foreclosure lawsuit right away. This must be done before the foreclosure sale date (if one has been set already) in order to stop the sale of your home. This assures that the state court judge is on notice of your bankruptcy so the foreclosure can be stopped on time. The Tampa bankruptcy law firm you hired should file the suggestion of bankruptcy in your foreclosure case on your behalf.
Exceptions to Automatic Stay
The automatic stay does not apply to all types of debts, collection activities, or creditor harassment. Bankruptcy law provides for many exceptions from the automatic stay. A list of some of these exceptions are below, for a more complete list of exceptions see bankruptcy law 11 USC §362 or contact a bankruptcy attorney.
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 to you, contact us to today to schedule a free, confidential consultation with a Tampa bankruptcy lawyer at our firm.