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What Is The Automatic Stay In Bankruptcy

Are There Exceptions To The Automatic Stay

What is an Automatic Stay in Bankruptcy?

There are two exceptions which apply to the automatic stay, and these exceptions only apply to repeat bankruptcy filers. The automatic stay is in effect only for thirty days following the date you file for bankruptcy, if you filed for bankruptcy previously and the case was dismissed within the past twelve months. If you file for bankruptcy and had two or more prior bankruptcy cases dismissed within the past year, the automatic stay will not go in to effect at all. This also includes those who initially filed under Chapter 7 and those who did not qualify under the Chapter 7 means test, so refiled under Chapter 13. If, however, you have clear and convincing evidence, that you did not act in bad faith by filing multiple bankruptcy cases, you may still be able to ask the Florida bankruptcy court to impose the automatic stay and stop a foreclosure on your home.

Speak To A Bankruptcy Attorney About Your Bankruptcy Issues

If you are facing significant financial hardships, filing for bankruptcy may be the best option for you. When you file for bankruptcy, an automatic stay will automatically come into effect. However, the automatic stay may not give you adequate protection against all creditors. Speak to a bankruptcy lawyer to get legal advice on whether filing for bankruptcy is the right path for you.

Stay Limited For Repeat Filers

If this isnt your first bankruptcy, the stay may be limited.

When the debtor has had a prior bankruptcy case dismissed within the past year, the stay lasts only 30 days.

If the debtor had two or more cases pending in the past year but dismissed, there is no stay at all.

The debtor in those situations must file a motion with the court in order to have the protection of the automatic stay.

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Actions Not Subject To The Automatic Stay

The automatic stay is not omnipotent. It does not cover every legal or financial issue that comes your way. You should therefore familiarize yourself with the following exceptions so that youre not operating on any misguided assumptions.

In addition to the actions mentioned above, the Automatic Stay does not cover the following:

  • Actions to Enforce the Higher Education Act
  • Actions to Exclude a Debtor from Medicare
  • Perfection of Certain Liens
  • Setoff of Income Tax Refund & Securities-Related Transactions
  • Collection Attempts on Loans Against a Pension Plan
  • Foreclosure Actions by the U.S. Department of Housing and Urban Development

How Long Does Stay Last

Automatic Stay and Bankruptcy Litigation

The automatic stay remains in effect until

  • The bankruptcy judge lifts the stay at the request of a creditor
  • The debtor gets a discharge
  • The case is closed or
  • The item of property is no longer property of the estate.

Thus in Chapter 7, the stay may prevent immediate foreclosure on a debt secured by real estate. However, the stay will expire, and the creditor be freed to proceed, when the debtor gets a discharge.

In Chapter 13, the stay remains in effect for the life of the Chapter 13 plan.

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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.

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The Bankruptcy Automatic Stay

How does filing for bankruptcy protect you from creditors? Theres a provision in the Bankruptcy Code called the Automatic Stay. After filing your case with the bankruptcy court, you are legally protected from garnishment, foreclosure, collections, lawsuits, etc. Just like everything else, there are a few exceptions to this, but well cover that in more detail below.

What Is An Automatic Stay: Florida Bankruptcy Law

What is the Automatic Stay in Your Personal Bankruptcy Case

The automatic stay in Chapter 7 and Chapter 13 bankruptcy is one of the most important tools available to borrowers. The automatic stay requires all collection activity against borrowers to stop immediately after a case has been filed. Creditors and collection agencies will not be able to pursue any collection actions when the stay is in effect. The automatic stay even stops garnishments and foreclosure auctions already scheduled to occur. For more information about the automatic stay or bankruptcy contact a Tampa bankruptcy attorney to schedule a consultation.

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Need Help Filing For Chapter 7

Upsolve is a non-profit company that helps low-income individuals and couples who cannot afford a bankruptcy lawyer to file Chapter 7 on their own. Click here to use Upsolveâs free bankruptcy screening tool to help you qualify.

We do not provide legal advice, but we do provide free bankruptcy resources, bankruptcy forms, and information that can help you file Chapter 7 without an attorney.

The Automatic Stay Lasts Until Discharge

In a typical Chapter 7 bankruptcy, the automatic stay remains in effect until the debtor is discharged. See 11 U.S.C. § 362. This is not the end of the analysis. With respect to property of the estate, the stay lasts until the property is longer part of the bankruptcy estate. See 11 U.S.C. § 362. In most cases, this means that creditors cannot take action against a debtors property until the bankruptcy is closed. See 11 U.S.C. § 554.

Further complicating things is the fact that not all bankruptcy cases end in a discharge. The stay terminates when a bankruptcy case is closed or dismissed, whichever is earlier. See 11 U.S.C. § 362.

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How An Automatic Stay Affects Your Tax Lien

Assume your county government put a lien on your property because you did not pay your property taxes, or the IRS placed a lien on your home for non-payment of taxes. Once that lien is filed, the IRS, county or state government can sell your property to satisfy the debt. Automatic stays do not apply if your tax lien is for property taxes which were due after you file your Florida bankruptcy filing. The automatic stay will not apply if the taxes fall under the category of those which cannot be discharged in bankruptcy. The automatic stay does not apply to property which is exempt from the bankruptcy proceedings under Florida allowed exemptions or property which has been abandoned. As an example, suppose you are filing for bankruptcy, and you owe $1,480 for your property taxes, but the taxes arent technically due for several months. Even if you file for bankruptcy, and an automatic stay is issued, it will have no effect on the amount you owe for your property taxes.

Help With Chapter 7 Or Chapter 13 Bankruptcy

What is an Automatic Stay in Bankruptcy?

Filing for bankruptcy is complicated and time-consuming. Getting legal advice isnt always cheap but it can save you money in the short term as well as the long run.

If you need help finding a lawyer or locating free legal services, check with the American Bar Association for resources and information.

Protecting your home and car from creditors is important enough to seek legal advice and its job No. 1 for bankruptcy attorneys.

You may qualify for help from your local Legal Aid Society. If you are low-income, options also could include nonprofit websites that help people file bankruptcy.

Remember, if you file for bankruptcy, legally you must undergo.

All individual filers are required to complete pre-bankruptcy credit counseling and pre-discharge debtor education.

One of the choices could be a debt management plan that might restore financial health without having to file for bankruptcy. Contact a nonprofit credit counselor to ask about all the options available.

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Discharge Provides Permanent Injunction

The automatic stay terminates when property is no longer property of the estate. The protection of the debtor and his assets, current and future, is replaced by the discharge injunction.

So, unless the claim you are prosecuting before bankruptcy against the debtor is non dischargeable, you are not free to resume suit against the debtor once the discharge is entered.

What Is The Automatic Stay In Bankruptcy

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The moment a consumer files for bankruptcy, such as Chapter 7 or Chapter 13, an automatic stay typically takes effect immediately.

The automatic stay temporarily halts most judgments, collection activities, foreclosures and repossessions of the consumers property, which is known as the bankruptcy estate. There are some limits and exceptions, though.

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How Do You Fight A Motion For Relief From Automatic Stay

There are two fundamental ways you can fight a motion to lift an automatic stay for Chapter 13. The types of objections you can make are procedural and substantive. A procedural objection challenges the way the motion was filed, and a substantive objection challenges the substance of the motion itself.

What About Child Support Or The Irs

What is the automatic stay? – Bankruptcy

Child support and alimony collection are not stayed.

Tax collection by the IRS or state is, though they can still offset a refund.

Meaning, the refund amount can be applied to your tax liability.

But they cannot levy other property or file liens.

Basically, the automatic stay expires when you get your bankruptcy discharge.

So if you stopped making car payments, that creditor can repossess the car.

There are other exceptions to the automatic stay.

Landlord-tenant eviction stuff is complicated.

It does not stop a criminal court fine.

Also, the bankruptcy court can lift the automatic stay upon request, after notice and hearing.

So, if you file a Chapter 7 bankruptcy, but are way behind on your house payment, the mortgage company may file a motion for relief from the stay so that they can resume foreclosure proceedings.

And, being that Chapter 7 bankruptcy does not provide a method for you to catch up on those missed payments, the Court will likely grant that motion.

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Filing For Florida Bankruptcy After Your Landlord Receives A Possession Judgment

Although some states allow renters to temporarily stop an eviction and get caught up on their rent with an automatic stay, Florida is not one of those. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 gave landlords the right to evict tenants when a judgment for possession of the property is in place prior to the bankruptcy filing. If you are behind on your monthly rent payments, but no judgment has yet been obtained by your landlord, an automatic stay could stall an eviction proceeding, at least for a time. Your landlord will not be allowed to start eviction proceedings until he or she has petitioned the court, asking them to remove the automatic stay. Some courts will lift the automatic stay to allow the eviction to proceed, others will not. If the automatic stay prevents eviction, you will need to bring your past due payments current, and continue to stay up-to-date on your rent payments.

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Example Of An Automatic Stay

Akis clothing store has been doing poorly for some time, and he fell behind on the mortgage for his shop, his credit card debt, and his loan payments. In total, he owed $170,000 to various creditors. He filed for Chapter 7 bankruptcy, and the court granted him an automatic stay on his debts. Collection agencies, which had been pursuing him, had to stop calling him.

However, his creditors filed for relief from the automatic stay. Akis store was located in an up-and-coming neighborhood, and his lenders wanted to take advantage of the appreciation in prices to rent it out to another business or sell it while it was still in presentable condition.

Aki disclosed the state of his finances to the court, and it was clear that he wasnt in a position to maintain the property. Considering the facts of Akis case, the court granted relief from the stay to his creditors, and they were able to repossess the shop.

Dischargeability Not An Exception To The Stay

Bankruptcy, the Automatic Stay, and Litigation

Even creditors whose claims are not dischargeable in bankruptcy must respect the automatic stay. There is no exception just because you know, or hope, that your claim will survive the bankruptcy.

There is a long list of actions not within the scope of the stay, found in subsection b of 362, headed by carve-outs for criminal matters family law actions for paternity and status tax assessments .

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Stopping Some Tax Proceedings

The automatic stay will not help you in the following scenarios:

  • If the IRS wants to audit you or issue a tax deficiency against you
  • If the IRS demands that you file a tax return, or issues a tax assessment
  • If the IRS demands payment for taxes that are owed

However, if you are protected by the automatic stay, the IRS cannot issue a tax lien against your income or property

The Automatic Stay Defined

The automatic stay is the United States bankruptcy provision which temporarily prevents creditors, government entities, and collection agencies from pursuing debtors for the finances owed.

The moment you file for bankruptcy, you are protected and the automatic stay goes into effect. However, there are some things that the automatic stay does not protect against. These unprotected actions include tax audits, criminal proceedings, support payments, etc.

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Can I Still Be Involved In A Lawsuit After Filing For Bankruptcy

The automatic stay protects you from actions to collect against your estate, but not from all lawsuits. First, the stay has no effect on criminal proceedings. If youre in trouble with the law, bankruptcy cant help you delay your trial. The stay also wont stop civil suits for the purposes of establishing paternity.

There are certain circumstances in which even a collection action may be possible regardless of the automatic stay. If you owe child support or spousal support, youre still subject to collection actions after you file for bankruptcy. Youre also still subject to divorce proceedings on the division of your property.

Bottom line is, the automatic stay provides strong protection from creditors. If you believe a creditor has violated the stay, speak to your bankruptcy attorney. If need be, you can take the matter to court. Bankruptcy courts wont hesitate to enforce the stay and ensure that you get all the protection to which bankruptcy entitles you.

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