01 Aug Automatic Stay: What Is It? And Why You Don’t Want To Lose It!
When a bankruptcy is filed the debtor gets an automatic stay. The stay is a very important.
It prevents your creditors from continuing any attempts to collect on the debts thatare owed.
While in place, the creditorscan’t:
- Call you in an attempt to collect on a debt;
- Send you letters or other correspondence to collect on a debt;
- File a lawsuit against you, or if a lawsuit has been filed, the creditor can’t continue with the lawsuit;
- Start or continue a foreclosure proceeding; or,
- Garnish wages.
If a creditor does attempt any collection actions while the stay is in place, then the creditor runs the risk of a court awarding you monetary damages and attorney’s fees for violating the stay.
Under most circumstancesit remains in place for the life of your case.
How can you lose your stay?
The most common way that a debtor losesit isby not making the monthly payments on his secured debts that are required in his Chapter 13 Plan.
If the post Chapter 13 petition plan payments are not made then, the creditor will normally file a Motion To Lift Stay. If the court does grant the motion, then the creditor can resume its collection actions.
Another way that an automatic stay can be lost is when acase is dismissed and refiled within one year.
When acase is filed within one year of a dismissed bankruptcy, the stay is not automatic. Instead, theit remains in place for only 30 days unless a motion isfiled requesting that the courtcontinue itthrough the life of the case.
While less common, a secure creditor in a Chapter 7 may also file a motion to lift the stay.
During a bankruptcy, it is important to tell your attorney about any problems you have either with creditors contacting you or with difficulty in making plan payments.
An experienced bankrutpcy attorney can take action to protect your rights.
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