Bankruptcy Automatic Stay

Automatic Stay in Bankruptcy

What is a bankruptcy automatic stay? The automatic stay stops all actions by creditors against the debtor. If your creditors are calling and harassing you, a provision in the bankruptcy code called the automatic stay will give you immediate relief. If you file for bankruptcy in Alabama, the automatic stay goes into effect immediately. The automatic stay forces creditors to stop taking legal action against you and from even contacting you. In addition to preventing creditors from starting new efforts to collect, the automatic stay will stop collection actions that are already in process, including lawsuits, foreclosures, wage garnishments, evictions, repossessions, and tax debt proceedings. If you have questions about the automatic stay and how bankruptcy law can help you, the bankruptcy attorneys at Ferguson & Ferguson can help. We can help you protect yourself against creditors and get started on the road to debt relief. Call 256-350-7200 or 256-534-3435. Calling our Huntsville and Decatur bankruptcy attorneys is the first step on the road to debt relief.

What Can the Automatic Stay Do for You?

If you want to get the creditors to quit calling, filing for bankruptcy and enacting the automatic stay is your best option. Once the automatic stay goes into effect, your creditors are not even allowed to call you, write you, or harass you. Any communication will have to go through your bankruptcy attorney. If you file for bankruptcy and your creditors try to contact you, you can tell them to call us. We will deal with the creditors. In most situations, the automatic stay will:

• Stop foreclosures
• Stop repossessions
• Stop wage garnishments
• Stop creditor lawsuits
• Stop creditor harassment
• Stop IRS collection activity

Automatic Stay Limits

In most cases, the automatic stay remains in effect for the duration of the bankruptcy case. However, there are situations in which the automatic stay is limited or not enforced at all:

If you have filed for bankruptcy in the last year and your case was dismissed, the automatic stay will only last for 30 days.
• If you have had more than one bankruptcy dismissed in the past year, it will not go into effect at all, unless you take the proper steps to protect you and your estate.

Bankruptcy Automatic Stay Frequently Asked Questions

The following answers provide general information about the bankruptcy automatic stay. Bankruptcy cases are fact-specific, and you should speak with an attorney about your individual circumstances.

What is the bankruptcy automatic stay?

The automatic stay is a protection that generally takes effect when a bankruptcy petition is filed. It requires most creditors to stop collection activity against the debtor and the debtor’s property while the stay remains in effect.

When does the automatic stay begin?

In most bankruptcy cases, the automatic stay begins immediately when the bankruptcy petition is filed with the court. Limitations may apply when the debtor has had one or more bankruptcy cases dismissed during the previous year.

Does the automatic stay stop creditor phone calls?

The automatic stay generally requires creditors and debt collectors to stop collection calls, letters, and other attempts to collect covered debts after they receive notice of the bankruptcy filing.

Can the automatic stay stop a foreclosure?

The automatic stay can generally pause a pending foreclosure after a bankruptcy case is filed. The protection may be temporary, and a mortgage lender may ask the bankruptcy court for relief from the stay.

Can the automatic stay stop a vehicle repossession?

The automatic stay can generally stop or delay a vehicle repossession if the vehicle has not already been repossessed before the bankruptcy filing. Continued protection depends on the bankruptcy chapter, payment arrangements, and other circumstances.

Does the automatic stay stop wage garnishment?

The automatic stay generally stops most wage garnishments for dischargeable debts after the bankruptcy case is filed. Domestic support garnishments and certain other obligations may be treated differently.

Does the automatic stay stop creditor lawsuits?

The stay generally pauses lawsuits and court proceedings brought to collect debts that arose before the bankruptcy filing. Some proceedings are excluded from the stay or may continue after court approval.

Does the automatic stay stop IRS collection activity?

The stay may stop certain IRS collection actions, including some levies and seizures. It does not stop every tax-related action, and filing bankruptcy does not automatically discharge all tax debt.

Does the automatic stay stop an eviction?

The automatic stay may temporarily stop some eviction proceedings. Protection may be limited when the landlord obtained a judgment for possession before the bankruptcy filing or when other statutory exceptions apply.

How long does the automatic stay remain in effect?

The stay may remain in effect until the bankruptcy case is closed or dismissed, a discharge is entered, or the bankruptcy court grants a creditor relief from the stay. Different rules can apply to particular property or repeat filings.

What happens if I had a bankruptcy case dismissed during the past year?

When one bankruptcy case was pending and dismissed during the prior year, the automatic stay may terminate 30 days after the new case is filed unless the court extends it after a timely request and appropriate showing.

What happens if two bankruptcy cases were dismissed during the past year?

When two or more bankruptcy cases were pending and dismissed during the previous year, the automatic stay may not arise automatically in the new case. A debtor may need to promptly ask the bankruptcy court to impose the stay.

Can a creditor ask the court to lift the automatic stay?

Yes. A creditor may file a motion asking the bankruptcy court for relief from the automatic stay. This commonly occurs when a secured creditor claims that its collateral is not adequately protected or the debtor is not making required payments.

What should I do if a creditor contacts me after I file bankruptcy?

Tell the creditor that a bankruptcy case has been filed and provide the case number and your attorney’s contact information. Keep records of calls, letters, emails, and other communications, and promptly notify your bankruptcy attorney.

What is an automatic stay violation?

An automatic stay violation may occur when a creditor knowingly continues prohibited collection activity after receiving notice of the bankruptcy. Available remedies depend on the facts and whether the violation was willful.

Does the automatic stay erase my debts?

No. The automatic stay temporarily stops or limits many collection activities. A bankruptcy discharge is the separate court order that may eliminate personal liability for qualifying debts.

Are all collection activities stopped by the automatic stay?

No. Bankruptcy law contains exceptions for certain proceedings and obligations. Examples may include some criminal matters, domestic support proceedings, tax actions, and cases in which the stay has been limited or lifted.

Can an emergency bankruptcy filing activate the automatic stay?

An emergency bankruptcy filing may activate the automatic stay when the required petition and other necessary documents are properly filed. Filing requirements and repeat-filing limitations must still be satisfied.

Does Ferguson & Ferguson offer free automatic stay consultations?

Yes. Ferguson & Ferguson offers a free initial consultation for people considering bankruptcy. The Huntsville office can be reached at 256-534-3435, and the Decatur office can be reached at 256-350-7200.

Where are Ferguson & Ferguson’s bankruptcy offices located?

The Huntsville office is located at 303 Williams Avenue SW, Suite 321, Huntsville, Alabama 35801. The Decatur office is located at 211 Oak Street NE, Decatur, Alabama 35601.

Contact Ferguson & Ferguson Now

For a free initial consultation about filing for bankruptcy with Ferguson & Ferguson, call 256-534-3435 now. We understand the bankruptcy laws, and we are here to help. Huntsville Office Location: 303 Williams Avenue SW Suite 321 Huntsville, AL 35801 Decatur Office Location: 211 Oak Street NE Decatur, AL 35601