In a previous article about the automatic stay provision of the bankruptcy code we lined up a few situations in which this section of the bankruptcy law stops bill collectors in their tracks. As a general rule, when a petition for bankruptcy relief is filed and accepted by the bankruptcy court, the automatic stay provision is effective and remains in place until the bankruptcy is over.
As a debtor, you do not have to do anything to use your automatic stay benefit. Rather, all your listed creditors should receive notice sent by your bankruptcy attorney informing them about the bankruptcy and the law prohibiting collection of debts while you are in a bankruptcy case. Having said so, it is important to note the scenarios in which actions and obligations cannot be avoided through a bankruptcy filing.
There are some legal actions not stopped by the automatic stay:
- Tax proceedings are allowed to proceed despite the automatic stay provision in bankruptcy.
- Pension loans are still collectable and are properly withheld from an individual’s paycheck to repay a loan from a qualified pension.
- Divorce proceedings continue and are not stopped by a bankruptcy filing. The automatic stay does not affect child support and spousal maintenance cases, however the underlying factors leading to the bankruptcy might impact financial outcomes.
- Child custody and visitation proceedings also continue in family court despite a bankruptcy case. Paternity of children can also be established with no concern for a bankruptcy matter.
It is possible to lose the protection of the automatic stay:
- If you had an earlier pending bankruptcy case filed within one year of your current case, the judge might not allow your automatic stay protection to take effect, based on certain facts and circumstances.
- If there are deadlines you must meet for addressing collateral property securing other debts, and you fail to comply, you might lose your automatic stay protection.
Eviction cases have special rules where the automatic stay will not matter:
- Creating a dangerous situation or condition or using illegal substances in connection with a rental property can lead to eviction the automatic stay will not prevent.
- Landlords obtaining judgments of possession before a tenant files for bankruptcy can still have tenants removed despite an automatic stay, in most cases subject to exception.
The bankruptcy code is full of general rules, exceptions and conditions in which exceptions might not apply. It is important to talk to an experienced bankruptcy attorney to find out how the automatic stay provision of the bankruptcy code can help you in your specific situation.
Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.