Automatic Stay

The Automatic Stay Described

What is the Automatic Stay in Bankruptcy?

It is relief! It’s a stop sign. It is an Order from the Federal Court telling your creditors to quit trying to collect.

Generally, this is the relief that many people are looking for. It’s when the lawsuits cease, the harassing calls stop, and the letters threatening collection efforts arrive no more. It’s the law and there are dire consequences should the creditors disobey it. Often, when clients ask how long does “it” take, they are referring to this very notion, how long before all the collections stop, the garnishments cease, and the lawsuits are no more. The Automatic Stay starts as soon as you file the case in bankruptcy court. For more information on the notion of “how long does it take”, please click here.

Under Section 362 of the Bankruptcy Abuse Prevention and Consumer Protection Act, filing bankruptcy provides immediate relief from most actions that can be taken by creditors to collect debts. This includes collection calls, billings, filing lawsuits, or most other forms of collection efforts unless the creditor files a motion with the Court, and obtains permission to do so. Generally, this is referred to as “Relief from the Automatic Stay”, meaning the creditor seeks relief from what is otherwise an obligation, and the Court does not hand them out easily.

Prohibited actions

Collection notices must stop, lawsuits cannot be continued, judgments cannot be taken, and garnishments cannot be pursued.

Exceptions

An exception to the Stay is if you have deposits with a creditor the creditor can “set off” what it owes you (i.e., the amount of your deposits) against what you owe it. Therefore, if you owe your bank or credit union money it is best to have as little as possible in the account on the date you file.

Loans against retirement. Withholding from the debtor’s wages and collection of loan amounts due as a result of the debtor’s borrowing from an employer-sponsored pension, profit-sharing, stock bonus, or other plans recognized by the IRS as tax-exempt.

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We help people file for bankruptcy relief under the Bankruptcy Code.

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By: Guss Markwell

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Markwell Law, LLC

1031 Peruque Crossing Ct, Ste. B
O’Fallon, MO 63366
Phone: 636-486-1093
Fax: 636-634-3462

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About the author

Guss Markwell

Originally from St. Louis Missouri, I grew up in a strong Midwest and moral family who taught me right from wrong and to stand up for my rights and the rights of others. In these tough economic times, you need an advocate on your side. Why do I practice law? Often, people are facing seemingly insurmountable opposition with little or no ability to overcome great odds. It is my position that we should all be fighting for those who find themselves alone, afraid, and at times unpopular. I subscribe to the notion that a society should be judged by how it treats its most vulnerable members. I represent, and I fight for, those people. “There is light at the end of that tunnel, don’t stop.”

The Automatic Stay In Bankruptcy