August 5, 2009

The Automatic Stay of the Bankruptcy Code is what it says - "Automatic"

Every so often, I read a letter or receive a call from an attorney or creditor after the filing of a client's bankruptcy, that attempts to explain to me the need for my client to file a motion with the local court to obtain a ruling as to whether the automatic stay applies to a collection case against the debtor.

Doing so is unnecessary. (although providing notice to the local court and other parties may be in order to ensure they are aware of the filing).

The filing of the bankruptcy petition alone invokes the bankruptcy code's automatic stay and it applies to collection activity in and out of court. (See 11 U.S.C. Section 362 of the bankruptcy code).

The "stay" provision takes effect the moment the case is filed and the debtor and his or her property is under the protection of the bankruptcy court itself with a few minor exceptions.

If you are in a bankruptcy case, and a creditor is continuing it's collection activity with knowledge that you have filed, it has probably violated federal law.

Talk to your bankruptcy attorney or a bankruptcy attorney experienced with automatic stay litigation in bankruptcy, if you are having this problem.

Posted by Michael S. Anderson | | Email This Post

Posted In: Automatic Stay and Bankruptcy , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

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July 10, 2009

Bankruptcy and the Automatic Stay - Mesa Arizona

If you file for bankruptcy, all collection activity by creditors must stop with a few exceptions. The part of the law governs this is called the "automatic stay".

So if a creditor is trying to collect from your or sue you based on a credit card, medical, breach of contract or other debt, they must stop all activity against you once you file.

They can't file a lawsuit, continue in a lawsuit, record a lien, report the debt to the credit reporting agency or seize property without permission from the court.

What happens if the creditor does continue with collection activity after notice of the bankruptcy has been received? They have likely violated the automatic stay rule and can be sued by the debtor. They may also have to pay damages and attorney fees.

I always suggest that if a creditor who is barred from collection by virtue of the bankruptcy filing continues to contact one of my clients, that the client or our office provide the creditor one more "notice" of the bankruptcy prior to suing. This notice usually goes out by phone and/or via a certified letter.

Most creditors "get the picture" and discontinue the contact.

Unfortunately, some continue. A lawsuit is then appropriate and often even necessary.

There are exceptions to the list of creditors who are completely barred from collection activity which will be discussed in further posts.

If you are in a bankruptcy and a creditor continues to contact you even after you are sure they know about the bankruptcy, you will want to speak to your attorney about whether a lawsuit is a good idea.

Posted by Michael S. Anderson | | Email This Post

Posted In: Automatic Stay and Bankruptcy , Bankruptcy Basic Questions , Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

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January 30, 2009

Chapter 13 Bankruptcy and the Automatic Stay for Arizona Debtors

The bankruptcy automatic stay or simply the "stay" from here on out, is a Court Order that becomes effective on the date of the bankruptcy filing that protects the bankruptcy filer from most creditor activity.

The following is a brief breakdown of the benefits, exceptions and other interesting bits of information related to it.

Benefits

1. Collection contact must stop - Once the stay is in effect most lawsuits, calls, letters, etc. etc. must stop. Even from the IRS.
2. The stay doesn't require the debtor to "ask" the Judge for it. It is automatic.
3. The stay remains in place during the length of the chapter 13 plan
4. The stay halts foreclosure activity - allowing the debtor a chance to propose a plan to catch up arrears.
5. The stay stops vehicle repossession and may be able to help get a car back that has already been repo'd.
6. Liens cannot be filed after the stay becomes effective
7. Debts cannot be reported to the credit reporting agency
8. Levy and Garnishment of assets in accounts and paychecks must stop
9. The debt component of a criminal proceeding will be placed on hold
10. Tax liens can't be filed
11. Tax levy must stop
12. Co-Debtors are protected immediately from collection activity and may be permanently protected depending on how the debt is treated in the chapter 13 plan.

How Long the Stay Lasts

The stay will last until the court confirms the chapter 13 plan which replaces the stay as a protective order OR when the case is dismissed.

Continue reading "Chapter 13 Bankruptcy and the Automatic Stay for Arizona Debtors" »

Posted by Michael S. Anderson | | Email This Post

Posted In: Automatic Stay and Bankruptcy , Chapter 13 Bankruptcy

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