An automatic stay stops most collection efforts on your debts during bankruptcy. It is often a welcome relief for people who have been dealing with creditors for a time. The injunction prohibits creditors from repossessing any properties, initiating or continuing any foreclosures, collection phone calls, collection letters, disconnection of utilities, bank levies, liens and wage garnishments.
Unfortunately, an automatic stay is not an absolute. Creditors can file motions to ask a bankruptcy court to remove the stay. If successful, the creditor may continue attempting to collect the debts.
While creditors can file motions, they do not always take that route. The creditor must convince the court there is a good reason the court should lift the stay. Most courts will not lift a stay on an unsecured debt that will be included in the debtor’s discharge.
Courts may consider lifting automatic stays in some cases. For example, secured creditors may ask for the stay to be lifted since there is property that is collateral if a person is not making payments or the property is not adequately protected.
Some unsecured creditors and other parties may seek to lift an automatic stay. This may be granted if it is an unsecured debt cannot be discharged in bankruptcy like back child support, spousal support or criminal restitutions.
For those who are renting, a landlord may file a motion to lift the stay in order to collect rent due. This would apply to rent accumulated since the bankruptcy filing, but not usually rent from before the bankruptcy filing, since that may be discharged.
If you are considering bankruptcy, you need an experienced advocate by your side. Call our office today for your free, initial consultation and find out how we can help you.