One of the benefits of filing for bankruptcy is the automatic stay that goes into effect. It’s one of the most powerful aspects of any bankruptcy filing.
But what is the automatic stay? What does it mean? And why should you care?
In this blog, I’ll explain when you can get an automatic stay, what debts aren’t included, and when an automatic stay goes into effect during bankruptcy proceedings.
If you have questions or need help filing for bankruptcy in Birmingham, schedule a free consultation at Nomberg Law Firm.
What is the meaning of automatic stay?
When I first started practicing law, the phrase “automatic stay” seemed odd to me. When I think of the word “stay,” I think of a command you give to your dog, “to stay.” It didn’t occur to me that the word “stay” could be used as a noun in the way that it is used in the bankruptcy context.
However, the automatic stay is a federal injunction that prevents the places and companies that you owe money from taking certain actions against you. They are required to stop or halt any actions or attempts to collect a debt.
That means creditors that you owe are not allowed to:
- Call you anymore
- Send bills
- Repossess your assets
- Garnish your wages or bank account
- File or continue lawsuits against you
- Proceed with foreclosure on your house
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What are the exceptions to the automatic stay?
There are certain debts where the automatic stay does not apply. These debts typically include:
- Actions related to establishing or enforcing child support or custody
- Certain criminal proceedings
- Perfecting a lien against your property
- Cashing of certain checks
- Getting new student loans
- Payment on 401(k) loans.
There are many others, so make sure you consult with an Alabama bankruptcy attorney.
How long does it take for an automatic stay to go into effect?
The stay happens immediately upon the filing of your bankruptcy case. When you file for bankruptcy protection, the bankruptcy stay automatically goes into effect. It applies even if the creditor has no knowledge of the bankruptcy.
Think about it this way: if your auto lender repossesses your car after you file for bankruptcy protection, they will have to return the car, even if at the time they took the car, they didn’t know about the bankruptcy. The bankruptcy protection is automatic and absolute once your case is filed.
The stay requires that all of your creditors deal with you on a level playing field under the bankruptcy rules. Creditors MUST seek and get court permission to continue to pursue certain actions. Any creditor who ignores the rules does so at its own peril and may be fined or even sanctioned by the judge for violating your automatic stay.
The protection starts the moment you file for bankruptcy. It is one of the most useful tools that will help you achieve the fresh start that you deserve.
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Have questions about an automatic stay in your Alabama bankruptcy case?
If you are struggling to pay your debts and are concerned about the future welfare of you and your family, it’s important that you seek the advice of a bankruptcy lawyer to ensure that your assets are protected and the debts you seek to eliminate are dischargeable.
At Nomberg Law Firm, attorney Steven D. Altmann has been assisting consumers and business owners with bankruptcy matters for over 25 years. He has earned an AV rating from Martindale-Hubbell’s peer-review rating and was recently named a Super Lawyer and Top Attorney by Birmingham Magazine in the area of Bankruptcy Law.
If you’re considering filing for bankruptcy, please consider contacting experienced Birmingham bankruptcy attorney Steve Altmann at Nomberg Law Firm to schedule a free consultation.
We are a Federal Debt Relief Agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.