- What is Chapter 7 Bankruptcy?
- Can a Business File for Chapter 7?
- What is the Bankruptcy Automatic Stay?
- What Does the Automatic Stay Stop?
- How Long Does it Take to File Chapter 7 Bankruptcy?
- What is the Chapter 7 Means Test?
- What are Exempt Assets?
- What is ‘secured’ debt?
- Can I transfer or dispose of my possessions or property before I file bankruptcy?
- What is Chapter 7 Discharge in Bankruptcy?
Generally speaking, the automatic stay stops foreclosures, repossessions, lawsuits, wage garnishments, and tax levies. It does not stop criminal proceedings or legal actions against you for support (such as child support).
Automatic stay: Under bankruptcy law, an automatic stay is an automatic injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy.
The filing of a bankruptcy petition triggers an “automatic stay” that brings to a halt any type of creditor action. That means that collection companies can no longer contact you, pending lawsuits are stayed, and pending bank levies are stayed. The idea is that the stay gives you a chance to get a discharge in a chapter 7 case or to get a plan confirmed in a chapter 13 case. If your car was repossessed the car company has to return the car. If your bank account was levied, the amounts taken will likely be turned over if the bankruptcy is timely filed. In foreclosure situations, the foreclosure sale will be taken off calendar. For tax levies, the taxing authority will suspend the levy. The effect of the stay is immediate. The bankruptcy can be filed hours before a foreclosure sale or hours before a trial. Notice just has to be given to the opposing party.
The stay is in existence until the debtor gets a discharge or the case is closed. The bankruptcy code however, provides a mechanism for relief for a secured creditor who is not receiving payments on their collateral. For instance, if you are a homeowner and you intend to keep your residence you have to continue making your mortgage payments. If you do not, the mortgage company will have grounds to ask the court to grant “relief from stay” to allow them to foreclose on their collateral. That means that if the court grants relief from say, the mortgage company could start or continue the foreclosure process. In many instances, a good bankruptcy attorney like David A. Arietta, can negotiate a settlement whereby the debtor starts making their mortgage payments again and pays an additional monthly payment to catch up on the post-petition arrears. In other instances secured creditors will seek relief from stay to repossess vehicles, especially in the situations where the debtor decided to surrender the vehicle. The vehicle may have been not worth keeping and the car value was less than the outstanding loan balance.
Each situation is unique. For a personalized review of your situation, call David A. Arietta at (925) 472-8000.