The Automatic Stay Explained

Generally, when a person files for Chapter 7 or Chapter 13 bankruptcy, an automatic stay is triggered. The bankruptcy stay prevents creditors from taking certain collection actions against the debtor, such as:

  • Foreclosure
  • Repossession
  • Garnishment
  • Eviction
  • Discontinuing a service or benefit provided to the debtor
  • Harassing the debtor with collection calls or letters
  • Pursuing a collection lawsuit against the debtor

In most cases, in order for a creditor to proceed with collection efforts, the creditor must file a motion with the court asking for permission to do so. A creditor wanting to repossess a debtor’s vehicle or ready to foreclose on a debtor’s home might file such a motion. If the court agrees to lift the stay for that particular creditor, then the creditor can proceed with collection actions against the debtor while the bankruptcy case is pending. An experienced Washington DC bankruptcy attorney can protect you and your assets from prohibited creditor actions.

Sometimes the Stay Is Not Automatic

Usually the bankruptcy stay automatically takes effect when the case is commenced and remains in effect until the case is closed. However, in some situations, the automatic stay is limited to 30 days or does not go into effect at all. In most cases:

  • If the debtor had a prior bankruptcy case pending within the previous one year, the automatic stay goes into effect for only 30 days, and the debtor must file a motion with the court requesting that the stay be extended for the duration of the case.
  • If the debtor had two prior bankruptcy cases pending within the previous one year, the automatic stay does not go into effect at all, and the debtor must file a motion with the court asking for the stay to be imposed.

Typically, a debtor seeking to extend or impose a bankruptcy stay must demonstrate that the current case has been filed in good faith and explain how he or she plans to be successful this second (or third) time around.

A qualified Maryland bankruptcy attorney can help you file the necessary paperwork to ensure the bankruptcy stay protects you and your assets for the entirety of your Chapter 7 or Chapter 13 bankruptcy case.

The Automatic Stay Can Halt a Foreclosure

For homeowners facing foreclosure, filing bankruptcy may be a viable option for keeping their home. In most cases, the Chapter 7 debtors can try to negotiate a loan modification, forbearance agreement or short sale with the lender before receiving their Chapter 7 discharge, while Chapter 13 debtors can pay off mortgage arrears through the plan and emerge from bankruptcy caught up on their mortgage.

To learn more about bankruptcy and foreclosure, contact a Maryland or Washington DC bankruptcy lawyer today. An experienced Washington DC or Maryland bankruptcy lawyer can help you understand the automatic stay and all aspects of the bankruptcy process.

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