The Automatic Stay

When a person find themselves facing overwhelming debt, they have various concerns, especially if they’re considering filing for bankruptcy, such as whether they’ll lose their house or have to sell off their possessions. However, one of the main draws of filing for bankruptcy is that it triggers what’s known as the automatic stay, which temporarily halts all creditor collection activities until the bankruptcy process is complete, giving individuals much-needed breathing room. Learn more about the automatic stay and contact the skilled Franklin County bankruptcy lawyers here at Cousino & Weinzimmer LLC for assistance today.

How Does the Automatic Stay Work?

The automatic stay is an immediate and powerful legal protection that takes effect the moment an individual files for bankruptcy. Once the bankruptcy petition is submitted, the court issues an order that prevents most creditors from continuing their collection efforts. This means that wage garnishments, foreclosure proceedings, repossessions, and even harassing creditor calls must come to a halt.

This stay remains in place throughout the bankruptcy process, offering individuals the time and space to assess their financial situation without the constant pressure of debt collectors. In a Chapter 7 bankruptcy, the stay typically lasts until the case is discharged or dismissed, which is usually a matter of months. In Chapter 13 bankruptcy, it can extend for several years while the filer adheres to a court-approved repayment plan. However, creditors can petition the court to lift the stay under certain circumstances, particularly if they can demonstrate that their interests are being unfairly impacted.

What Debts and Actions Are Stopped by the Automatic Stay?

The automatic stay provides broad protection against most forms of debt collection, but it is particularly useful in stopping:

• Foreclosures and Repossessions: If a homeowner is behind on their mortgage, the automatic stay can temporarily halt foreclosure proceedings. Similarly, if a vehicle is at risk of repossession, the stay prevents the lender from seizing it during the bankruptcy process.
• Wage Garnishments: Creditors who have obtained court orders to garnish wages must immediately stop doing so once the stay is in effect.
• Evictions: In certain cases, an automatic stay can delay an eviction, but this depends on whether the landlord has already obtained a final judgment for possession.
• Lawsuits and Judgments: Civil lawsuits related to unpaid debts are put on hold, preventing creditors from securing judgments or enforcing liens.
• Utility Shut-Offs: If a person is behind on utility bills, the automatic stay can prevent service shut-offs for at least 20 days.

Are There Any Exceptions to the Automatic Stay?

Although the automatic stay offers extensive protection, there are important exceptions that individuals should be aware of. Some of the most common exceptions include:

• Criminal Proceedings: If a person owes court-ordered fines, restitution, or is facing criminal charges related to financial matters, the automatic stay will not prevent those cases from proceeding.
• Child Support and Alimony: Bankruptcy does not halt obligations to pay child support or spousal maintenance. These payments must continue despite the filing.
• Certain Tax Liabilities: While the automatic stay may stop the IRS from placing a lien or seizing property, it does not prevent the government from assessing taxes, demanding tax returns, or enforcing certain tax audits.
• Multiple Bankruptcy Filings: If an individual has filed for bankruptcy more than once within a short period, they may receive only a temporary stay or none at all. For instance, if a bankruptcy case was dismissed within the last year, the automatic stay may only last 30 days unless the debtor can prove to the court that the new filing is in good faith.
• Evictions in Some Cases: If a landlord has already obtained a court order for eviction before the bankruptcy filing, the automatic stay may not prevent them from proceeding with removing the tenant.

Contact Our Skilled Columbus Bankruptcy Lawyers

If you’re facing significant debt, don’t wait to take action–the time is now, and our firm stands ready to help. Contact the skilled Franklin County bankruptcy attorneys here at Cousino & Weinzimmer LLC to schedule your free case evaluation with our dedicated legal team.