The Automatic Stay
The automatic stay freezes most collection attempts and lawsuits upon the filing of a chapter 7 or 13 bankruptcy. It is a powerful tool that can be used to protect property and give you a chance to regroup financially. Below are listed some of the most common protections of the automatic stay, and actions that will not be affected by the automatic stay.
What the Automatic Stay can prevent
- Foreclosure. The automatic stay will temporarily stop a foreclosure in a chapter 7 bankruptcy. In a chapter 13, foreclosure can be stopped and default can be cured over a three to five-year payment plan. (Learn more about Mortgages, Foreclosure and Chapter 13).
- Eviction. The automatic stay will temporarily stop an eviction unless the landlord has already won an eviction proceeding in court and has a judgment of possession. If not, it may be possible to cure the default and continue the lease, possibly even beyond the end of the lease. (learn more about evictions during bankruptcy)
- Repossessions – The automatic stay prevents repossessions. If the repossession was recent, you may be able to recover the property. (Learn more about Repossessions and Bankruptcy)
- Utility disconnections. The automatic stay will stop disconnection of water, electric, gas, or telephone service for at least 20 days. (Learn more about Utilities and bankruptcy)
- Wage garnishments. The automatic stay will stop wage garnishment. Recent monies garnished may be recoverable. (Learn more about Bankruptcy and Garnishment)
- Tax liens – The automatic stay will stop the IRS or other taxing authority from issuing a tax lien or enforcing that lien by garnishing wages or seizing property. (learn more about taxes and tax liens in bankruptcy)
- Driver's Licence Suspensions - administrative license suspensions based on failure to pay money are prevented. Criminal suspensions are not affected.
- Public benefits over-payment collections. The automatic stay stops deductions from benefits resulting from an over-payment.
What the Automatic Stay can't prevent
- Certain tax proceedings. The IRS can still:
- audit you,
- issue a tax deficiency notice,
- demand a tax return,
- issue a tax assessment, or
- demand payment of an assessment.
- Support actions including:
- paternity suits
- Suits relating to alimony, division of marital property or child support
- Criminal proceedings. The automatic stay will only affect debt related issues in a criminal case such as some fines and restitution.
- IRA or Pension Loans. If you borrowed money from your IRA or pension, wage deductions to repay the loan will not be stopped by the automatic stay. (learn more about retirement accounts in bankruptcy)
The automatic stay is limited to 30 days if you had a pending case within the last year. If you had two cases pending within the last year, the stay is not automatic. In either case the stay can be reinstated with a motion by your attorney. In most cases the court will reinstate the stay unless there was a pending motion to lift the stay by a creditor in the previous case, or the case was not filed in good faith.
The stay can be overcome by a creditor. (Learn more about Lifting the Stay)
At David Holland law we focus on Consumer Bankruptcy and Debt Defense. We proudly serve Manatee and Sarasota Counties. We offer free phone or in-office consultations. Our main office is in Bradenton, but we can meet by appointment in Venice or Sarasota. Contact or call us at (941) 744-5450 to speak with an experienced bankruptcy attorney today.