Blog Post

The Automatic Stay

Posted by: Paula Greenway
June 25, 2008
Topic: How Can Bankruptcy Help Me?

In bankruptcy cases, we as attorneys use the concept of the "Automatic Stay" as an everyday term. However, it has recently occured to me that some of my clients may not actually know what this term means or, moreover, how they are helped by it.

When someone files for bankruptcy protection, and they have not had a bankruptcy case pending and dismissed within the last year, the Court automatically imposes a stay on collection efforts by creditors. This means that creditors cannot legally attempt to collect a debt that is owed by that debtor, without being in violation of the court's order. Garnishments must stop. Lawsuits are put on hold. Moreover, those creditor calls must stop. Ofter, it takes a few weeks for creditors to get notice and put the information in their system, but after a reasonable notice period, they are assumed to have notice and then are liable for collection efforts.

If someone had one prior case pending and dismissed within the prior year, there is only a thirty day stay on collection efforts and, unless the attorney asks the court to extend that thirty day period, it will expire. However, when the attorney asks for the extension of the stay, and good cause is shown, the request is usually favorably met.

A person with two or more prior cases pending and dismissed with the immediate year preceeding filing of the new case will have no stay. If, upon filing a motion to impose a stay, the attorney can show a change in financial circumstances, the motion has a good chance of being granted. Please note, however, there is no stay in effect from the time of filing of the 3rd plus case until the date the motion is granted.

Should you have any questions, please don't hesitate to contact me.

Paula Greenway

Blog Post

The Automatic Stay

Topics

Recent Updates

Archives

Web Resources

Subscribe