Skip to main content

A Brief Overview of the Automatic Stay of Bankruptcy

 Despite being a misunderstood concept, the "automatic stay" is a basic bankruptcy principle. The automatic stay typically kicks in the moment a debtor submits a bankruptcy petition. While trying to rearrange their debts and financial concerns, a debtor is protected by it from the reach and contact of creditors, which is one of the main benefits of automatic stay. 

 

Purpose of Automatic Stay  

The debtor and their creditors are both protected by the automatic stay. Debtors gain a respite from the ongoing collection efforts and can concentrate on developing a workable plan for a reorganization action without feeling undue pressure from particular creditors. Additionally, the automatic stay guarantees that all debtors are treated fairly. Without the automatic stay, the assets would most certainly be taken by the first creditors to make legal claims, leaving the other creditors with nothing. 





Preventions of Automatic Stay  

• For as long as your bankruptcy case is active, an automatic stay will stop foreclosure actions.  

• Tenants who are facing eviction may benefit from stays, although the relief is not as long-lasting as it is in the case of foreclosure. There may be a temporary reprieve from eviction, and the landlord may ask for the stay to be lifted while the bankruptcy case is still pending.  

• If you received any overpayments, such as Medicare or unemployment benefits, an automatic hold prevents creditors from taking the excess money. Notably, it does not prevent the organization that administers your benefits of automatic stay from terminating your payment.  

• A stay can stop multiple wage garnishments. If the debt that caused your wage garnishment is discharged in bankruptcy, declaring affordable bankruptcy Sarasota, Florida could permanently halt the garnishment. 

 

Exceptions to the Automatic Stay  

• A creditor is only permitted to get in touch with a debtor who is a party to an active securities transaction in order to close that transaction.  

• When the lease was completely cancelled prior to the filing of affordable bankruptcy Sarasota, a landlord may get in touch with a tenant debtor.  

• A debtor may receive communications from a local, state, or federal tax authority in order to conduct a tax audit, request a tax return, or issue a tax assessment.  

• When there is "inadequate protection of an interest in the property," such as when the value of the property is anticipated to drop significantly while the automatic stay is in effect, the court may permit a creditor to avoid the automatic stay.  

• The automatic hold does not apply to all types of debt, including alimony, child support, and restitution payments for crimes committed. 

 

Bottom Line  

One of the most potent and far-reaching federal regulations, the automatic stay in bankruptcy, has the ability to halt even the most challenging collection activities while the case is pending. After a bankruptcy petition is filed, most creditors are automatically barred from taking any further action to collect on a debt. The debtor has the right to sue any creditor or debt collector who disobeys the automatic stay. You can contact Recovery Law Group for necessary legal assistance. Their team has experts, and they will handle your affordable bankruptcy Sarasota case with professionalism. 

Comments

Post a Comment

Popular posts from this blog

Chapter 7 bankruptcy Las Vegas to eliminate your debts and give you a fresh restart for financial stability

Chapter 7 bankruptcy focuses on liquidating your non-exempt assets, and your many types of unsecured debts are eliminated. You may be suggested to file for Chapter 7 bankruptcy by your lawyer based on certain signs, like your unsecured debts are more than half of your annual income, or it would take you five years or more to pay your debts even if you took extreme measures. Bankruptcy will set you financially free as debts get discharged, and you also get peace of mind. When the stress and anguish go away, you will be in a condition to make better decisions, and handle your financial life in a better way.         When the process is complete, a vast majority of debts will be eliminated, and you will have a cleaner slate to start afresh. To qualify for Chapter 7 bankruptcy Las Vegas in Nevada, you will have to pass a Means Test, that aims to prevent low earners from getting the benefits of Chapter 7 bankruptcy protection. To qualify for the test, your averag...
Post a Comment
Read more

All that you need to about bankruptcy and expectations in bankruptcy consultation

You may feel the need to file for bankruptcy for many reasons, like your debts have become overwhelming and unmanageable, or you experienced job loss or reduction in income, that may make it hard to keep up with your payments and other regular financial commitments. Though filing of bankruptcy could be a difficult decision, especially when it has a stigma attached to it, nevertheless, it’s a legal option that gives you a chance to put your business together and have a financial restart. However, not everyone is aware of which type of bankruptcy they qualify for, and how to proceed with it. It’s here that the expertise of specialist bankruptcy lawyers, such as Recovery Law Group, can make all the difference to your financial future. When you consult for bankruptcy, you will come to know that all individual bankruptcy cases are handled by federal courts in the USA. Most individual bankruptcies are filed either under Chapter 7, or Chapter 13 of the US Bankruptcy Code.   You may ...
Post a Comment
Read more

Understanding the role of Chapter 13 bankruptcy trustee and their critical functions

  Chapter 13 bankruptcy, also known as “Wage Earner’s Plan”, is offered to individuals who need some extra time to pay off their outstanding debt. To qualify for Chapter 13, the debtor must have a steady income from various sources, and should not have more than $2,750,000 in unsecured debts, and $2,750,000 in secured debts. The debtor is given 3 to 5 years of time to repay their outstanding debt, and must demonstrate the ability to make the scheduled payment based on their income. The proposed plan must be feasible, and for this, the bankruptcy court will appoint a trustee to work out the plan, and how to repay the creditors.        The trustee has an important role to play in Chapter 13 bankruptcy. He will ensure that the proposed repayment plan complies with legal requirements, and is feasible based on the debtor’s income and expenses. The role of Chapter 13 bankruptcy trustee is quite comprehensive, he has to collect monthly payments from the debtor, an...
Post a Comment
Read more