Understanding The Automatic Stay
The choice to file for bankruptcy is not one that is ever made lightly. Those who pursue this route are typically suffering from excessive debt that was incurred for reasons they would not have chosen. A clear example of this is the fact that the leading reason why people file for bankruptcy is medical debt which is something that none of us would willingly pick. Excessive debt of all kinds usually comes with being pursued by a variety of different creditors. Between harassing calls and letters, finding yourself in this situation can be extremely overwhelming. Borrowers are often relieved to find out that beginning the bankruptcy process can quickly offer relief from these negative experiences. This is because of something called the automatic stay.
What is an Automatic Stay?
Section 362 of the federal Bankruptcy Code contains automatic stay provisions that kick in as of the moment a bankruptcy case is filed and halt all collections activities and other creditor actions attempted against a borrower. These automatic stay provisions provide immediate protection from the majority of creditors from the second that an individual or entity files a petition for bankruptcy. This protection also lasts until the conclusion of the case at which point debts are either discharged entirely or otherwise accounted for in a more financially feasible way.
The scope of the automatic stay is also very broad which makes it one of the primary benefits of filing bankruptcy. An automatic stay can halt:
- Phone calls and letters from creditors
- Lawsuits against a debtor
- Foreclosure proceedings
- Vehicle repossessions
- Wage garnishments
- Eviction proceedings
Does Every Debt Quality for an Automatic Stay?
Unfortunately not. There are provisions that are not subject to the automatic stay. One of the most common examples of this is a child support obligation.
What if Automatic Stay Provisions are Violated?
Creditors that violate an automatic stay can incur negative consequences which can be especially significant any time a court determines that a creditor willfully violated the automatic stay. In addition to incurring sanctions, creditors can find themselves facing heavy fines and even punitive actions. If you have found yourself in a position where a creditor has taken action that may violate the stay, you should immediately alert the legal team that is assisting you with your bankruptcy.
We Can Help You
Filing for bankruptcy can be a good way to improve your financial situation. As this process can be extremely complicated, you should also be as smart about it as possible when it comes to how you attempt to proceed. It is always best to work with a professional attorney who is experienced in helping borrowers navigate through the world of bankruptcy law and escape the clutches of creditors. As the Plantation bankruptcy attorneys at Nowack & Olson, PLLC, you can depend on us to guide you appropriately throughout the bankruptcy process and make sure that you complete your paperwork correctly and completely. That way, we can help you swiftly eliminate the harassment you have suffered from creditors as well as begin on a pathway toward financial relief. Begin by contacting us for a free consultation today.