What is an Automatic Stay?
Creditors have many weapons in their arsenal to try to collect on a debt:
- Repeated telephone calls to your house;
- Repeated telephone calls to you at work;
- Letters, Letters, Letters;
- Letters from an attorney;
- Lawsuits;
- Garnishments.
And this in when the creditor is being nice.
When someone files for bankruptcy they get what is called an automatic stay.
The automatic stay stops all action by a creditor to collect on a debt:
- The creditor can’t call your home or place of work once the automatic stay is in place.
- The creditor can’t write to you once the automatic stay is in place.
- If the creditor has sued you, the creditor’s attorney can’t go forward with the lawsuit once the automatic stay is in place.
- If the creditor got a judgment against you as the result of a lawsuit, they can’t take action to collect on the judgment once the automatic stay is in place.
- If the attorney for the creditor has started garnishing your wages, he has to stop once the automatic stay is in place.
In summary, an automatic stay buys you some peace. It stops creditor harassment.
If a creditor or the creditor’s attorney violate the automatic stay, then they run the risk that the Bankruptcy Court will penalize them.
Penalties for violating the automatic stay can include, money damages and attorney’s fees.
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