The Basics Behind An Automatic Stay

automatic stayWhen debts pile up creditors are often relentless in their collection efforts. It can be difficult to find relief from debt collectors when attempting to resolve debts. Therefore, one of the most sought after benefits of the bankruptcy process is protection from creditors.

The Automatic Stay

When a person files for bankruptcy the court issues an automatic stay order. This order offers legal protection from creditors, collection efforts and seizure of assets during the bankruptcy process. What this means is that once creditors receive notification of an automatic stay, they are prohibited from contacting the debtor to collect. Creditors are not allowed to begin or continue law suits against the debtor, make collection calls or attempts, implement wage garnishments, or repossess or foreclose on property.

The automatic stay order remains in effect until the debtor receives a debt discharge or the judge lifts the order. There are some cases in which a judge lifts the automatic stay order at the request of the creditor. For example, if the creditor is requesting the lift on a secured debt the court may grant the lift for purposes of being able to receive payments from the debtor to prevent asset liquidation. Another exception in which an automatic stay may be lifted is if the creditor claimed legal right to evict a tenant prior to the filing or the tenant is being evicted on the basis of illegal acts.




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