An automatic stay is a legal order in U.S. bankruptcy law that takes effect immediately after your filing. It is a powerful provision that protects you from creditor harassment, and understanding how it works is important in protecting your rights.
What an automatic stay does after a bankruptcy filing
You may be behind on your credit card debts or home mortgage. Since your last payment, you might have received calls from creditors, reminding you nonstop to settle your liabilities. As soon as you file a petition for bankruptcy with the court, the automatic stay halts communication regarding pre-petition debt collection. This also pauses:
- Existing civil lawsuits
- Wage garnishments
- Property repossessions
- Foreclosures
- Utility disconnections
Should a creditor continue to contact you during the bankruptcy process, you may sue them for breaching the boundary.
Why an automatic stay cannot terminate some obligations
Although the automatic stay allows you to breathe from constant reminders of debt, this provision has limits. It does not apply to every legal action, and key exceptions include:
- Criminal cases: Any ongoing criminal trial remains unaffected and will proceed as usual.
- Family support: If you have a court order that requires you to provide alimony and child support, the automatic stay cannot exempt these obligations and must continue despite a bankruptcy filing.
- New debts: Any debts that you incur after filing for bankruptcy remain unprotected from collection actions or civil lawsuits
Another thing important to note is that an automatic stay can end when a creditor files a formal request for a Relief from Stay. The courts can grant this if they find that you lack adequate protection or enough equity. This means the creditor can continue with their remedies, such as repossession or foreclosure.
What you must consider before filing for bankruptcy
If you have multiple debts but have low finances to pay them all back, you may file for bankruptcy. Doing so can trigger an automatic stay that stops creditors from seeking remedies from you.
But before you submit your bankruptcy filing, you must identify what type suits your financial situation best. A bankruptcy lawyer in Louisiana can offer guidance and insights that will help you move forward.