Bankruptcy offers relief and protection to people who have unsuccessfully exhausted all avenues to get out from under their debt. It is fortunate that these legal options exist, as the non-stop efforts of aggressive debt collectors, repossession attempts, and the threat of foreclosure can take an incredible psychological toll. If you are facing a financial crisis, your should speak with a bankruptcy attorney to learn about your options.
Bankruptcy Offers an Automatic Stay
In bankruptcy cases, an automatic stay goes into effect when the initial bankruptcy pleadings are filed. This stay is a temporary legal injunction that essentially stops creditors in their tracks when it comes to harassing calls, collection actions, repossession, and even foreclosure. This is an incredibly powerful tool and can provide some much needed breathing room for people to get their financial future in order. Significantly, a creditor can be held liable for damages if a bankruptcy court finds that it acted in violation of an automatic stay.
What an Automatic Stay Covers
An automatic stay provides a wide range of temporary legal protections, which includes:
1. Injunctive relief against debt collections. Debt collectors engage in all forms of harassment, from calls, to letters, to lawsuits seeking judgments. The automatic stay puts a halt to all of these actions for the duration of the bankruptcy proceedings until discharge is ordered.
2. A temporary halt to foreclosure proceedings. If a lender has begun foreclosure proceedings, a stay prohibits the lender from taking further action. The lender must obtain an order from the bankruptcy court to lift the stay as to the property.
3. A halt to eviction proceedings. If a landlord has begun eviction proceedings, a bankruptcy stay will prohibit further action. An exception to this is if the landlord has already obtained an order authorizing the eviction.
Significantly, there are limits to the power of the automatic stay. This includes the enforcement of family law orders, such as property division, alimony orders, and child support orders. In addition, for public policy reasons, a stay does not apply to most government-initiated actions, such as criminal cases or code enforcement actions.
The Effect of Prior Bankruptcy Filings
If a debtor has a recent history of filing for bankruptcy, there are different rules that govern automatic stays. Specifically, if the debtor has been involved in a bankruptcy proceeding that was dismissed within the past year, an automatic stay in a new proceeding will only last for thirty days, unless the individual is specifically granted an extension of time.
In addition, if a debtor has been involved in two or more bankruptcy proceedings that were dismissed in the past year, there is no automatic stay. Instead, the debtor must demonstrate to the court that the new case has been filed in good faith and obtain an order from the court granting a stay.
Let Us Help You Move Forward
If creditors are hounding you, you need to take control of your financial future and contact a bankruptcy attorney. You have options and legal rights, and we can help you attain financial relief. At Levitt & Slafkes, P.C., we have over thirty years of legal experience and will provide you with everything you need to make smart, informed decisions. Let us fight for you. You can reach us at (973) 323-2953 to schedule a consultation, or you can reach us online.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years.