Bankruptcy Lawyer Bryan W. Stone answers the question “Does Bankruptcy stop foreclosure?”
One of the most important aspects of the bankruptcy process, at least for those eager to end the harassing calls from collectors, is the automatic stay. The automatic stay serves as an immediate (though temporary) stop to the vast majority of debt collections. Though the automatic stay is powerful and can be a welcome relief to many bankruptcy filers, there are limits to what it can do. To find out more about the automatic stay, keep reading.
When a person files for bankruptcy protection, the automatic stay begins right away. The automatic stay means that debt collection efforts against the filer must immediately come to a halt. This means phone calls, letters, repossession efforts and even foreclosure procedures come to an end, at least while the automatic stay is in place. The purpose of the automatic stay is to give debtors a bit of breathing room, a break from the exhausting collection efforts of many creditors. It also allows the bankruptcy trustee to have time to evaluate the financial situation without the added burden of incessant collection attempts.
What things are excluded from the automatic stay?
The automatic stay, while powerful, isn’t able to deflect all debt collection efforts. For instance, the automatic stay does not do anything to stop enforcement of police or governmental efforts to collect money. This means that if the government is trying to get money owed to it or police are trying to collect money related to a crime, the automatic stay will not stop that. Taxes, and efforts to collect back taxes, are also not prevented by the automatic stay. Yet another exception, and an important one in some cases, is that alimony or child support actions are not prevented from moving forward. That means efforts to collect back child or spousal support can be commenced or continued despite an automatic stay.
What happens if creditors violate the automatic stay?
If a creditor decides to ignore the bankruptcy petition and violate the automatic stay that was put into place, there can be serious repercussions. For one thing, the bankruptcy court may award monetary damages to the bankruptcy filer, forcing the creditor to pay money to the debtor for breaking the law. Another possibility is that the creditor could be ordered to pay attorney’s fees for the bankruptcy filer.
When is the automatic stay lifted?
The automatic stay expires when the bankruptcy case has been discharged. In some cases, the bankruptcy court may decide to lift the automatic stay early, depending on the circumstances. This often happens when a creditor petitions the court to lift the stay for cause. An example would be if a creditor claimed the debtor was causing damage to an item of property and that the only way to protect the value of the item is to repossess it right away. The court might decide to lift the automatic stay and allow the repossession to move forward.
If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.
About the Author
Kyle Frost joined Arnold & Smith, PLLC in 2013 where he focuses his practice on all aspects of civil litigation and bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.
Born and raised in upstate New York, Mr. Frost attended the University at Albany on a Presidential Scholarship, graduating magna cum laude with a double major in Political Science and Sociology. He went on to attended Wake Forest University School of Law in Winston Salem, North Carolina.
Following college, Mr. Frost spent over a year teaching English in South Korea. He worked in a private school in Seoul developing curriculum, English programs, and educating both children and adults that were interested in learning a new language.
In his spare time, Mr. Frost enjoys homebrewing, fishing, and travelling.
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