What is the automatic stay and how will it affect my bankruptcy case?

The automatic stay can be your best friend. An automatic stay is the provision in the U.S. Bankruptcy code that requires all creditors to immediately stop all debt collection actions against you. This means that your creditors are allowed to start, continue or complete debt collection actions like wage garnishments, lawsuits and foreclosures (only for chapter 13). In other words, if your house is in a foreclosure sale, your lender has to pull it off the market.

Typically, the automatic stay stays active for the life of your bankruptcy petition. This means that the automatic stay is over when your bankruptcy petition is discharged (successfully completed) or dismissed.

The automatic stay affects your bankruptcy case depending on your bankruptcy chapter. For example, if you’re trying to save your home then the automatic stay allows you to stay in your home until the chapter 13 is completed or dismissed. That way you won’t have to worry about moving or your home being sold. There is a danger with an automatic stay. If you’ve missed a chapter 13 payment or a mortgage payment, the lender can file a motion to lift the automatic stay. In other words, the creditor can continue with the foreclosure process.

An automatic stay is a complicated process. However, before filing bankruptcy, you should contact a bankruptcy lawyer to acquire a detailed understanding of the automatic stay. In addition, the lawyer will file your bankruptcy petition or stop a motion to life the automatic stay if one is filed.