As soon as you file for bankruptcy, a court injunction will be placed into effect. Known as an “automatic stay,” this injunction stops any and all collection attempts. Once in place, the order does these things:
- Prevents creditors from filing lawsuits against you.
- Prevents creditors from calling or contacting you in an effort to collect the debts owed.
- Protects your assets from being seized. This means that it can generally help prevent your wages from being garnished, stave off foreclosure and prevent banks from enacting levies against your accounts. In addition, you may be able to ward off eviction from rented properties.
Exceptions to Automatic Stays in Bankruptcy Cases
Child support and alimony payments are not stayed at all. However, although student loans and tax debts may not be discharged, collection actions on these dets are stayed during the bankruptcy case.
Additionally, if a borrower has filed for bankruptcy within the past year, his automatic stay will only last 30 days. After this period, creditors can restart their collection attempts. The automatic stay in these situations can be extended, but we have to quickly go to Court and show that the new case was filed in good faith.
Creditors may also attempt to lift the injunction. To be successful, they must prove the automatic stay is not effectively serving its intended purpose. If successful, they allow the continuation of any foreclosures, wage garnishments or bank levies. In these cases, I go to bat for your ability to recover from financial hardship. Call (718) 544-0500 for a free initial consultation regarding your bankruptcy case.