We are often asked by people who are considering filing for bankruptcy in Littleton, Aurora, and Centennial: What is automatic stay? What does it accomplish when I file for bankruptcy? Automatic stay is one of the most beneficial aspects of Learn more about Chapter 7 bankruptcy. Let’s take a look at how it helps you overcome the debt in your life.
Automatic Stay is a Powerful Bankruptcy Tool
The automatic stay in Chapter 7 and Chapter 13 bankruptcy is a powerful tool for debtors. While many people know it is beneficial during the bankruptcy process in Highlands Ranch, Parker, and Lone Tree, they have no idea just how important it really is. When you file for bankruptcy, an automatic stay goes into effect. Essentially, an automatic stay “freezes” all creditors from being able to contact you about your debts. In other words, creditors will not be able to contact you regarding your debts once you have filed. This includes:
Judgments or Contracts
Any attempt to collect money from you is illegal once you have filed for Chapter 7 or Chapter 13 bankruptcy. Attempts to collect are prohibited by the bankruptcy code. This means you will get relief from the constant chaos of collection calls and the stress about possible lawsuits. There are a few areas, such as child support collections or alimony, which will continue after the automatic stay has gone into effect, but these areas are limited.
What Happens When the Automatic Stay is Violated?
If a debt collector violates the automatic stay, there are many legal implications. The court is able to impose sanctions (including lawyer’s fees) when a creditor violates the automatic stay knowingly. Simply put, if a creditor violates an automatic stay in bankruptcy, they could end up owing you money. It is important to know that in order for the creditor to face legal implications for violating the automatic stay, they must have been aware of the bankruptcy filing when they attempted to collect a debt. But, most creditors are aware of current bankruptcy filings if they are included on your bankruptcy schedules. The bottom line is – if a creditor knew you had filed for bankruptcy, and took an action against you to collect a debt (even accidentally) – they could face legal consequences.
What is “Relief from Stay” in Colorado?
In some specific cases, a creditor is able to “seek relief from stay.” This means they can file a motion to get permission to pursue you for a debt while the automatic stay is pending. The courts rarely grant this motion for unsecured creditors, however. The most common creditor who asks from “relief from stay” are mortgage companies. These secured creditors often file the motion in order to pursue foreclosure on your home. They seek relief from the stay, because the automatic stay prevents foreclosure cases and pending sales of your property. Because mortgage companies can file a motion to get relief from stay, it is important to consult an expert bankruptcy lawyer who can help you time your Chapter 7 bankruptcy filing so you can fully utilize the benefits of the automatic stay.
If you’re researching bankruptcy in Colorado and have asked the question: “What is automatic stay?” contact the best bankruptcy attorney for your situation who will help you get a fresh start and take advantage of the benefits of the automatic stay. Contact experienced bankruptcy lawyer Barry Arrington for a free consultation at 303-205-7870. He will help you get the best fresh start possible.