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The Definition and Use of an Automatic Stay

Posted on in Bankruptcy Attorney

In the course of bankruptcy, consumers are given an avenue to wipe the slate clean. It is a legal status for people who aren't able to pay for debts that they can't pay due to medical reasons, unemployment, or a variety of other concerns. There are two options primarily used by consumers to start over, a chapter 7 bankruptcy (liquidation) or chapter 13 bankruptcy (restructure).

Prior to declaring for bankruptcy, creditors or collection agencies will continually contact the lender until the balances are collected. Past just mail and phone calls, possessions such as cars that were paid using credit can be taken back and houses can be subject to foreclosure sales. Wages earned at work can be garnished up to a certain amount each week and bank accounts can be levied which freezes the assets until the debts are paid.

Once a bankruptcy has been filed, there is a simultaneous injunction called an automatic stay. This is a provision that is afforded to the debtor which stops all actions by creditors under penalty of legal action. This stay becomes a permanent stay after the debt is discharged by the bankruptcy court, which is why it is so necessary to list all debts and assets in the bankruptcy petition. Otherwise, once the process is over, the debts that have not been discharged can still be collected by creditors.

Before the stay becomes permanent it is possible for it to be overturned. Creditors are able to petition the bankruptcy court to allow them to continue seeking debts. This can be granted if the stay is not serving its correct purpose. If you are interested in filing for bankruptcy to stop creditor harassment, then make sure you seek out the assistance of a legal professional. Contact an experienced bankruptcy attorney in Cook County who can work diligently so that your bankruptcy goes as smoothly as possible.

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