The filing of a bankruptcy case and the creation of the debtor’s greatest weapon: the automatic stay.
Immediately when your bankruptcy case is filed, an automatic stay is created. An automatic stay is the equivalent of a restraining order that prevents creditors from taking certain collection actions against you. These collection actions include:
- Telephoning you at home, work, or on your cell phone
- Filing lawsuits against you or continuing with lawsuits that are already in process
- Repossession attempts
- Foreclosure proceedings
- Wage or bank garnishments
- Recording any liens or judgments
- Anything that attempts to collect a debt or improve a creditor’s position as it relates to a debtor and the underlying debt
The automatic stay is not absolute
There are exceptions to the automatic stay, especially in the case of re-filings. Creditor actions are not stayed in the following circumstances:
- Criminal actions; Filing a bankruptcy will not prevent federal, state or local authorities from pursuing their criminal action against you
- Lawsuits involving child support or spousal support are not stayed and can be pursued despite your bankruptcy filing
- Actions by governmental units to enforce a police power are not stayed
- In eviction cases, if the landlord has already obtained a judgment for possession prior to the bankruptcy case filing, then there is no automatic stay. A debtor should file bankruptcy prior to the landlord obtaining a judgment so that the stay can go into effect
- There is also no stay if the eviction is based upon endangerment of the rental property or an illegal use of controlled substances is occurring on the premises and the eviction started prior to the bankruptcy case being filed