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The automatic stay is one of the most important aspects and greatest protections for individuals filing bankruptcy. Once a bankruptcy petition is filed, a certain federal law goes into effect for your protection. This federal law is commonly referred to as an “automatic stay”. The “automatic stay” makes it illegal for creditors to take any action against you without the prior, express permission of the bankruptcy court.
This means all collection activity must stop, and a creditor may be subject to civil penalties and fines for attempting to collect any debt after you file bankruptcy. The ‘automatic stay” applies to all creditors, even those who did not have notice of the bankruptcy prior to the collection attempt. Under the “automatic stay” laws, debt collection includes:
- Initiation of Debt Collection Lawsuits
- Mortgage Foreclosures
- Repossession
- Debt Collection Lawsuits already in-progress
- Garnishment Actions
- Debt Collection Phone Calls and letters
The “automatic stay” component of a bankruptcy filing provides you with instant protection from creditor action, and a much-needed break from lawsuits, judgments, harassing phone calls, and threatening letters. The “automatic stay” continues in effect until your bankruptcy case is completed, or if a creditor obtains permission from the bankruptcy court to continue in its collection efforts, or the debtor receives a discharge. Violations of the automatic stay can result in substantial penalties for creditors, including damages for emotional distress and punitive damages.
To receive a free consultation regarding your (or your friend or family member’s) debt problems, please contact us today.
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