The Automatic Stay: What is it and how does it work?

The Automatic stay is a legal term used when a consumer files for bankruptcy protection. It is a stay, which means any collection attempts by a creditor, law suits, or garnishments must stop when a bankruptcy is filed. This provides the relief needed from most collection efforts, and it goes into effect immediately when a bankruptcy petition is filed, and stays in place until the completion of the bankruptcy (discharge or dismissal). The automatic stay is granted for both Chapter 7 bankruptcy and Chapter 13 bankruptcy filings.

The Automatic Stay — What is it and how does it work?

How the Automatic Stay will Help You

If you are experiencing harassment by creditors, the automatic stay can be beneficial. To suspend collection activities against you, the automatic stay will go into effect as soon as you file bankruptcy. The automatic stay is an injunction that helps you by suspending collection attempts as you reorganize your debt or restore your finances. Examples of collection attempts including: vehicle repossession, home foreclosure, and wage and bank account garnishment. If you need the protections provided by the Automatic Stay immediately, you should discuss the possibility of an emergency filing with your attorney. They will submit only a portion of your petition to activate the Stay, and have a short deadline to complete the rest of your petition.

Your Creditors Will be Notified

When a Las Vegas Bankruptcy attorney files a bankruptcy petition, a list of creditors is also filed. Each creditor is notified of the automatic stay by the bankruptcy court. If you are facing a wage garnishment, you will need to provide your bankruptcy case number to your employer so they know to cease garnishment of your wages. Filing bankruptcy may be in your best interest if you require immediate action to stop a foreclosure, wage garnishment, or repossession, as the automatic stay is granted.  Best practice is to seek the assistance of a Nevada debt relief attorney to assist you with your bankruptcy to assure that all of your creditors are given proper notice.  With proper notice and the assistance of the automatic stay,  creditors no longer will harass you.

Some Debts are Exceptions in Bankruptcy

There are certain collection actions that the automatic stay will not stop. Child support, divorce proceedings, criminal restitution, or tax debt, for instance, may not be stopped under the automatic stay. If they are stopped by the automatic stay, the collection will recommence once your case is completed. This is because these debts are nondischargeable, and you will remain liable for them after your bankruptcy is finished. A bankruptcy case will either end in discharge or dismissal. Discharge is a successful completion of a bankruptcy case, with the filer no longer liable for their debts. A dismissal is when the judge or trustee finds an inaccuracy or inconsistency in the debtor’s petition and throws out the case.  Contact our Las Vegas bankruptcy law firm and speak to our experienced Vegas attorney about your particular situation to determine if the automatic stay would be beneficial for your particular debt situation.

Your Creditors May Attempt to Bypass the Automatic Stay to Proceed with Collection 

The automatic stay is powerful. It is used to stop creditors from taking property that is exempt under bankruptcy law or that belongs to the bankruptcy estate. Creditors may ask the judge to remove the automatic stay. They will do so by filing a Motion for Relief from the Automatic Stay. If this Motion is granted, your creditor will be allowed to proceed with the garnishment, repossession, or foreclosure. Even if you filed your case without an attorney, you should contact one immediately if you receive notice of your creditor filing this Motion. You will need to respond to your creditor’s request swiftly to ensure your Automatic Stay of protection remains intact.

Still Have Questions about the Automatic Stay?

Bankruptcy is a complicated and confusing process, and you shouldn’t be embarrassed if you have more questions. Our professional bankruptcy staff is available for phone consultations so you can discuss your potential case from the privacy of your home. Our consultations are free of charge, so you can consider this important decision risk-free. If you have questions about how you can benefit from the Automatic Stay, which Chapter of bankruptcy you qualify for, the long-term effects of filing Bankruptcy, or how much it will cost, don’t hesitate to call. Get the ball rolling towards a financial clean slate and contact our Clark County Bankruptcy office today.

The Law Office of Erik Severino
Vegas Bankruptcy Lawyers
7251 W Lake Mead Blvd
Las Vegas, NV 89128

Phone : (702) 370-0155