Surely many people have seen a fair share of debtors filing for bankruptcy without having the immediate relief they needed. They may be on current bills or from previous ones but haven’t’ received a single notification from a creditor leading them to get overwhelmed by their loads and sees no other way out besides bankruptcy. So what is Automatic Stay really?
The Automatic Stay
Automatic Stay one of the most fundamental protections provided to debtors under the bankruptcy law of the United States. It takes effect against all virtually creditor activities upon the approval of the law in the court. The reason behind such law pursuant is because of the ever-common harassment by creditors over a period of time enabling debtors to get the relief they need from such behavior.
Under such law, a creditor with a claim, which has risen before the commencement of the bankruptcy filing is pushed to stop all collection activities. This goes with all mechanisms including credit card debts, foreclosure actions, repossession attempts, wage garnishments, lawsuits and even judgments. With the assistance of the Automatic Stay, all activities considered collection attempts will be temporarily stopped.
The protection given to debtors is automatic in many instances. Talking about What Is Automatic Stay pertaining to protections would include no holding of hearings as well as no signature from judge is required. It is automatically invoked upon filing of the bankruptcy and the issuance of a case number. When this happens, all creditors are immediately expected to be bound by the legal standards and regulations stated under the law and willful violations would tantamount to severe penalties imposed to the creditor.
Exceptions of the Law
Although the law is specifically designed to provide protection to debtors, there are still exemptions with the usage of it. An example of which would be if multiple cases have been filed by the same debtor. If someone files a case that eventually gets dismissed and then immediately files another case thereafter.
Upon the second filing, the stay would still be automatic, however, third and succeeding ones would not be. In such cases, a motion is needed summoning the parties in a bankruptcy judge in order to stay protected. The purpose of such is to thoroughly review and assess the current situation, allowing the judge to know if an automatic stay would have to be imposed again.
Even more so, when it comes to discussing what is Automatic Stay another matter that has to be noted is the things that this law cannot prevent. Some of which includes tax proceedings, criminal proceedings, support actions and the loans from a pension.
Getting Around with the Law
For creditors, getting around with the law can be achieved if the filed case is not serving its purpose. In this case, a creditor is entitled to petition for a “lift” from the Automatic Stay.