Centennial Chapter 7 and Chapter 13 Bankruptcy Automatic Stay | What is an Automatic Stay and How Does It Help?

When you officially file your Chapter 7 or Chapter 13 bankruptcy petition, an automatic stay is entered. Read more about what an automatic stay is and how it can benefit you.
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When a person files their Chapter 13 or Chapter 7 bankruptcy petition in Denver, Aurora, or Centennial, an automatic stay is ordered by the Denver Federal Bankruptcy Court. An automatic stay orders that all debt collection actions must stop immediately. Usually, it is entered by the court clerk upon receipt of the bankruptcy petition – meaning those annoying collection calls should stop as soon as you file your bankruptcy paperwork.

What Actions Does the Automatic Stay Prevent?

Under the Federal Bankruptcy Code, an automatic stay will prevent creditors from taking any of the following actions against a debtor:

  • Any judicial, administrative, or other process against the debtor- This can include evictions, wage garnishments, and civil suits a creditor or landlord can file against a debtor. Any pending cases will cease and no new cases can be filed;
  • Enforcing any judgments ordered before the bankruptcy was filed- If a civil suit or other judgement was previously ordered, the creditor cannot enforce the order;
  • Any repossessions or actions to take control of assets;
  • Creating, completing, or enforcing any liens against property or assets;
  • Restitution or settlements related to debts incurred before the bankruptcy case was filed.

The Purpose of an Automatic Stay in the Bankruptcy Process

The purpose of the automatic stay is to allow the debtor time to evaluate and reorganize their finances while also giving the bankruptcy trustee time to liquidate assets and determine creditor priority. If there were still legal injunctions and collections attempts, it would be harder for you, your attorney, your trustee, and the bankruptcy court to organize and understand your financial situation. It is a benefit given to the debtor, but can be taken away if the proper procedures are not followed. It is a way for debtors to protect their assets and income.

If you are ready to get a breather from your wage garnishment and collection calls, take the first step and call expert bankruptcy attorney Barry Arrington at 303-205-7870 to schedule your free consultation and begin your journey toward financial freedom.

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