When you file for bankruptcy, the court will issue an injunction that offers legal protection against creditors or bill collectors. This is known as an automatic stay, suspending proceedings to collect payment until the case concludes. This also restrains creditors from calling you, sending letters, garnishing wages, repossessing a property, and other activities related to debt collection.
Length of Automatic Stay
Salt Lake City bankruptcy lawyers note that if you haven’t declared a case in the previous year, the automatic stay will continue until the bankruptcy ends. If you, however, filed or had a case pending during the previous year, the stay will only last for 30 days. For two or more cases the year before, the stay will only be effective if there is an explicit order from the court.
Limitations of Automatic Stay
It is important to note that automatic stay does not eliminate or discharge your debt. It only stops creditors from harassing you regarding debt collection for a certain period (or until the case ends). It will help you in some emergencies such as eviction and utility disconnections. This, however, won’t help you in certain criminal proceedings and support actions.
The automatic stay will not stop:
- Tax liabilities
- Modification of child support or alimony
- Multiple filing
- Loans from certain pension types (IRAs and job-related)
Relief from Automatic Stay
Certain creditors can ask for relief or court’s permission to collect debt payment, even if the automatic stay exists. In this case, the injunction will still take into effect, but it will exempt a specific creditor. The thing is, only a few types of creditors can ask for relief. Only those who are secured, like creditors with a claim to a certain property, are allowed to ask for relief.
Bankruptcy laws are complicated, so it is best to get the assistance of an experienced bankruptcy lawyer. The right attorney will educate you about the particulars of bankruptcy and recommend which chapter is best for your situation.