What is Automatic Stay and How Can it Help You?
An automatic stay is a term used in bankruptcy proceedings concerning debt. It’s a legal term that means the creditors involved are to cease from all attempts at collecting debts once bankruptcy has been filed.
Anyone who is facing:
- Garnished wages, or
- Car repossession
can get some relief with an automatic stay. In reality, it’s a court order that the bankruptcy judge issues when a person files for Chapter 7 or Chapter 13.
When the stay is in force, it demands that any collection actions that were started must cease immediately. So if your mortgage company has scheduled a foreclosure, then the bankruptcy filing will put a halt to it.
These automatic stays also work for lawsuits and garnishments. If you are being sued and your creditors have scheduled a hearing, and you file for bankruptcy prior to the hearing, then that creditor cannot continue with collections and/or garnishments. The bankruptcy court takes over all responsibility and authority in the matter, trumping the county judge’s authority. When someone is having the wages garnished, even if the bank for their employer has already sent in money to the count court before the garnishment, the bankruptcy filling requires that the clerk give you the money back, or in certain cases it will go to the bankruptcy trustee.
When you have a car creditor threatening to repossess your vehicle, filing Chapter 7 or 13 will help you stop it. You can even get you vehicle back if it’s already been repossessed, if you file within of the repossession.
An automatic stay will also stop creditors from calling your and aggravating you all the time. They will no longer be able to ask you for payment. Another benefit to the automatic stay is that it stops written communication as well. Most creditors are very careful about sending out monthly billing statements or even collecting monies from debtors because they don’t want to risk violating an automatic bankruptcy stay.
You can probably tell that an automatic stay is powerful. Anytime creditors realize a person has filed a bankruptcy, either orally or any other way, all creditors have to respect and honor that automatic stay. It’s a real protection for those who need it.
Anytime someone violates an automatic stay they are subject to harsh sanctions by the bankruptcy courts. Debtors who are seeking sanctions toward creditors for wrongfully trying to foreclose on your home, or trying to repossess a car, will have to go to the bankruptcy court and file a special motion to have it stopped. Of course the debtor will have to show proof that a creditor is doing something wrong and violated the bankruptcy stay.
It’s plain to see how effective an automatic bankruptcy stay can be when you need its protection. It is a very effective tool for avoiding being wrongfully treated in certain financial matters. If you feel as though you may need an automatic stay of your own, contact bankruptcy attorney Matthew C. Hines and see about getting those creditors off your back. You can reach the office at (770) 941-0913 .