When The Automatic Stay Lifts Automatically
As mentioned before, the automatic stay ends when the discharge is entered because itâs no longer necessary. There is another way for the automatic stay to end automatically and without the need for the creditor to file a motion with the court. Itâs important to be aware of this so youâre not surprised when the creditor takes action.
When Does An Automatic Stay End
The automatic stay ends in three situations. The court can enter an order lifting the automatic stay. The stay also ends if the case is dismissed or discharged. ;
If a case is unsuccessful, then it ends in a dismissal. In this situation, the creditor can resume collection proceedings.;;
If the case is successful, a discharge is entered. A discharge is the elimination of the debt. A creditor cannot pursue collections of a discharged debt.;;
Some debts are not dischargeable, such as taxes, student loans and child support. If you owe these debts, collections may resume after discharge.
If you need relief from your creditors, you can hire an expert bankruptcy lawyer in Jackson, MS from The Rollins Firm and determine the best course of action.
Actions Subject To The Automatic Stay
;As soon as you file a bankruptcy petition, the automatic stay will suspend a variety of collection activities against you while you rehabilitate your finances or reorganize your debts. The injunction is binding in every court, jurisdiction and proceeding and can be especially beneficial if you are facing harassment from creditors. All secured and unsecured creditors are barred from collecting against pre-petition debts, or those you incurred before filing for bankruptcy.
However, the protective attributes of the automatic stay do have limits. There are a variety of exceptions, as youll see below, including the ability of collectors to recoup post-petition debts.
|Utility Disconnection||Attempts to Obtain Property From or Control Your Bankruptcy Estate|
|Most Evictions*||Collection of Benefit Overpayments That You Did Not Return|
|Collection Attempts on Debts You Incurred Prior to Filing||Info|
*Unless a judgment against you was issued prior to filing or your landlord claims you have endangered the property or used a controlled substance within the premises.
In addition to halting the major activities mentioned above, the automatic stay also curtails the following:
- Commencement or continuation of litigation proceedings that started prior to filing.
- Collecting on judgments made prior to filing
- Attempts to Exercise Setoff Rights on Debts You Incurred Prior to Filing
- Creation, Perfection or Enforcement of New Liens on Property of the Bankruptcy Estate.
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How Long Does The Automatic Stay Last
The Automatic Stay lasts as long as the bankruptcy does. The stay ends if the case is dismissed. But the length can vary based on the type of bankruptcy filing, since Chapter 7 cases are much shorter than Chapter 13. In Chapter 7 cases, the stay lasts three to four months. In Chapter 13 cases, the stay can continue for up to 63 months.
Since Chapter 7 cases last only a few months, most creditors dont bother filing for a lift of the automatic stay. And in Chapter 13 cases, you are required to repay most debts in full over the course of the payment plan, so again, a lift isnt beneficial to the creditor.
Because Of A Prior Bankruptcy Filing
The automatic stay can be impacted if you have filed any prior bankruptcies. If youâve filed a bankruptcy case within the last year, the automatic stay will only be imposed for 30 days in your current case. If you want to retain the protection of the automatic stay for the period of your bankruptcy, you will need to file a âMotion to Extend the Automatic Stay,â within that time period to avoid risking any period of time where you are not protected.
If youâve filed two or more bankruptcies within the last year, there will be no automatic stay and you will need to file a âMotion to Impose the Automatic Stayâ as soon as you file your case. In either situation, it is a good idea to consult with a bankruptcy attorney for some professional help before filing a new case.
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Does The Automatic Stay Stop Wage Garnishment
Yes. Once you file for bankruptcy, the automatic stay stops all wage garnishments until the stay is lifted by the bankruptcy court. A wage garnishment is a tool whereby a certain amount of your monthly income is taken from your paycheck to pay your creditor.
If you have multiple garnishments against your wages, then you may want to consider filing for bankruptcy as it would allow you to take home your entire paycheck.
The Stay Has Been Lifted Now What
Once they get a court order lifting the automatic stay, the creditor is allowed to move forward with the foreclosure or repossession of the property that secures the debt. The creditor does, however, still need to follow state law for their collection or eviction proceedings. At this point, itâs a good idea to contact the creditor directly to come up with a mutually agreeable surrender or move-out date. This helps any transfer move smoothly. You donât need to be worried about being taken by surprise by your car disappearing or your house being locked unexpectedly. Instead, you have the chance to make a plan.
The additional benefit to surrendering secured property through your bankruptcy is that if there is any unsecured portion of the debt that you owe those will be wiped out with the bankruptcy discharge. If you were to surrender secured property without bankruptcy protection you could be on the hook for any deficiency balance, which is really the worst of both worlds. You no longer have the property and youâre still paying on it. Now if for any reason there was extra money available after a foreclosure or repossession you might be entitled to all or a portion of the proceeds if your exemptions cover it.
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Automatic Stay What Is It And Does It Protect A Debtor From All Creditors
Automatic Stay — Immediately after a bankruptcy case is filed, an injunction is generally imposed against certain creditors who want to start or continue taking action against a debtor or the debtor’s property. Bankruptcy Code Section 362 discusses the Automatic Stay.
Protection for the Debtor It is important to read relevant statutes from the Bankruptcy Code and/or to consult with a competent bankruptcy attorney about the Automatic Stay because in some situations there is no Automatic Stay at all, or there is only an Automatic Stay if the debtor obtains a court order which imposes the Automatic Stay. There are many different time frames and deadlines, and creditors may still take action to collect from a debtor.
For information on Motions to Continue or Impose the Stay, see link below.
— If a creditor properly files and serves a Motion for Relief from the Automatic Stay, and a bankruptcy judge grants the Motion, the Automatic Stay will either be removed or modified so that the creditor can resume collection efforts against the debtor.
For information on Motions for Relief from the Automatic Stay, see link below.
Bankruptcy And The Automatic Stay
When a debtor files for bankruptcy, a court order called an automatic stay becomes effective as of the date of the bankruptcy filing. The stay prohibits creditors from attempting to collect amounts due for accounts included in the bankruptcy filing. Mortgage companies are not allowed to start or pursue foreclosure when an automatic stay is in effect, but they usually request relief from the automatic stay and get the bankruptcy court’s permission to continue collection efforts or foreclosure. Bankruptcy courts may penalize debtors who frivolously file multiple bankruptcies in attempts to avoid paying their mortgage debt.
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How A Stay Of Proceeding Works
A stay of proceedings;is an automatic feature of filing a consumer proposal or bankruptcy.; You dont have to ask for one you get one as soon as you file.
As soon as you inform your trustee of a legal action your trustee will put the Court, and the parties involved in the lawsuit, on notice that you have filed bankruptcy and the stay is in place. This is one of the roles of your bankruptcy trustee to deal with creditors and creditor actions for you.
This protection from your creditors remains in place during your bankruptcy;unless;the creditor applies to the Court to have it lifted.
Once you are are discharged from bankruptcy the stay stops but at that time it doesnt matter because the debt would have been included in your bankruptcy and has been eliminated by your discharge so theres no longer any basis for a lawsuit.
What Is The Benefit Of A Motion For Relief From The Automatic Stay
The benefit of a motion for relief from the automatic stay is that the creditor can take back the collateral more quickly than just waiting for the bankruptcy to end.
Since a;Chapter 7 Bankruptcy;only takes three months, the motion only gives the creditor two extra months in a Chapter 7 , but a;Chapter 13 Bankruptcy;can take up to 5 years.
Most secured lenders in a Chapter 7 Bankruptcy case dont file motions for relief.
They often prefer to wait the three months and then foreclose or repossess after the bankruptcy case is discharged.
This is because:
- There are additional attorneys fees and complications to filing a motion for relief from the automatic stay
- Foreclosing 2 months sooner is generally not worth very much to the creditor
A car is not going to depreciate much, and a house isnt going to gain in value, in just 2 months.
They are not in the business of selling houses and cars; they just want you to make your normal payments and keep the property.
The Length Of An Automatic Stay
The automatic stay lasts as long as the bankruptcy proceeding continues, and it ceases if the case is dismissed. The length of the stay also depends on whether it applies to collection activity directed toward the debtor personally or toward their property. The length can also vary based on the type of bankruptcy filing, since Chapter 13 bankruptcy cases typically last much longer than those filed under Chapter 7.
Another factor is how many bankruptcy cases the debtor is involved in. Having more than one bankruptcy case pending at the same time is known as serial filings. For instance, some debtors will first file for Chapter 7 bankruptcy and then follow up with a Chapter 13 filing. If a debtor has had one case pending during the previous year and then files a second one, the automatic stay will only last for 30 days in the second case unless the court agrees to extend it. If a debtor has had two cases pending during the previous year, then no automatic stay will go into effect when a third case is filed, unless a motion is filed with the court and unless a judge agrees that filing three cases is reasonable for that debtors circumstances.
How Long Is Automatic Stay In Chapter 7
The automatic stay typically lasts the entire Chapter 7 case. It goes into effect the moment the petition is filed and remains in effect until either:
The automatic stay is no longer needed after a case is discharged because a discharge eliminates the debt. If the creditor tries to collect a debt after discharge, they are violating the discharge order, not the automatic stay.
If you have filed multiple bankruptcy cases within the last year, the automatic stay is temporary and you must file a Motion to Extend the Stay.
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Which Type Of Bankruptcy Should I File For
There are two primary types of bankruptcy individuals file forChapter 7 and Chapter 13. Both are great options for debtors, depending on their situation. Essentially, in Chapter 7 bankruptcy, debts such as medical bills, personal debts, credit card debts, and more will be fully discharged, and you will no longer have to worry about that debt. That being said, however, there are certain nondischargeable debts, including child support or alimony payments, money you owe for lawsuits, and, in most cases, college student debt. To file for Chapter 7, you will have to prove that your family income is less than the average family income in your county and that you can no longer pay off your debts.
Chapter 13 bankruptcy is more for individuals with assets valued at more than the average family income in their county, and the process itself is structured a bit differently. In Chapter 13 bankruptcy, you will establish a 3-to-5-year plan with the Bankruptcy Court, wherein you will pay off your debt at a rate that your income and daily expenses allow.
What Is The Automatic Stay
The Automatic Stay is possibly the most important advantage of a bankruptcy case. This single-page Federal Court Order is activated automatically by the U.S. Bankruptcy Court as soon as you file your petition.
This injunction provides you with instant protection, and alerts creditors that a bankruptcy case has been filed. It puts an immediate stop to most collection activity and lawsuits against you or your business.
What The Automatic Stay Can And Cant Prevent
The Automatic Stay prevents actions like:
- Evictions and property foreclosures
- Collection calls, notifications, or other harassment
- Limited IRS actions
The Automatic Stay does not prevent:
- Criminal proceedings
- Child Support payments
- Some tax liens
The object of the automatic stay is to keep creditors from seizing assets. Once bankruptcy has been filed, creditors will likely only receive a portion of what they are owed.
What Are Automatic Stay Violations
The automatic stay allows the bankruptcy filer to have some breathing room from the lenders. Thus, a creditor’s attempt to repossess the debtor’s property in violation of the automatic stay will not have any legal effect.
Bankruptcy laws provide that any debtor can bring a civil suit against a creditor for willful violation of the automatic stay, and can recover damages.
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The Automatic Stay As A Steppingstone On Your Way To Lasting Debt Relief
The automatic stay can be seen as the first step toward debt relief. If gives the filer some immediate relief before their discharge is entered. The order of discharge is the point near the end of a bankruptcy case when youâre officially absolved of your debts. In Chapter 7 bankruptcy, youâll be able to walk away from all of your unsecured debts, like medical bills and any balance on your credit cards. This may or may not be your total debt, because certain debts, like child support, will survive a bankruptcy.
Part of the intention with a bankruptcy proceeding is to take any available assets from the filer and distribute those funds equally among all unsecured creditors. Youâre still able to protect most of your personal possessions by using exemptions. If, however, you have more than a small amount of non-exempt equity in a personal property item the Chapter 7 trustee can sell the property for the benefit of all unsecured creditors to share. If any single creditor were allowed to be aggressive in continuing to collect their own debt, that would leave less available to go to all the creditors overall.
What Are Some Exceptions To The Stay
Statement of Intent
Also, if you fail to file a Statement of Intention within 30 days of filing your Chapter 7 petition, the automatic stay terminates.
The Statement of Intention is a bankruptcy form that tells secured creditors what you intend to do regarding their debt. Secured creditors have a lien on property that secures the money you owe the creditor. If you do not pay the payments, the creditor gets to take the property. Examples of secured debts are mortgages and car loans.
When you file your Statement of Intention, you have 30 days to take whatever action you choose for each creditor. You can surrender your property to satisfy the debt. In other words, the creditor gets the property, and you do not owe the debt.
You can choose to sign a reaffirmation agreement to keep the property. A reaffirmation agreement says that you agree to pay the debt, usually under the same terms as the original loan, to keep the property.
Signing a reaffirmation agreement means that you owe the debt even after the bankruptcy case is closed. If you do not pay the debt, the creditor can take the property and sue you for any money owed after the property is sold.
The most common reason a creditor files a motion to modify the automatic stay is when you are not paying your mortgage payments, rent payments, or car payments. Some creditors may wait until the Chapter 7 case is closed , but you cannot be certain what a creditor may do after you file a Chapter 7 case.
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What A Stay Of Proceeding Will Stop
It doesnt matter what stage the action against you is in. Filing bankruptcy provides protection from;of all actions which means:
- If someone is threatening legal action;for money you owe them, a;stay of proceedings eliminates the threat.
- If they filed documents with a Court, the stay will stop the court action from proceeding.
- If someone has already started a legal action again a stay;stops the action dead in its tracks.
- If someone has already sued you and been given a Judgment against you by the Court the stay of proceedings stops the enforcement of the Court Order.
One of the most common actions stopped as a result of the stay from filing bankruptcy is a wage garnishment.
As you can see, a;stay of proceedings is a very powerful benefit when you file a consumer proposal or bankruptcy.