Tag Archives: automatic stay

Understanding the Benefits of the Automatic Stay

Automatic Stay

Bankruptcy Attorney serving Satellite Beach

If you are tired of being harassed by relentless debt collectors and you are wondering how filing for bankruptcy can help, the answer is a protection afforded to debtors called the “automatic stay.” As soon as you file your personal Chapter 7 or Chapter 13 petition, the stay immediately goes into effect and prohibits further collection activity against you. This means that all telephone calls, demand letters, lawsuits, garnishments and other similar forms of collection tactics must immediately stop.

There are some exceptions to the automatic stay, so it is important to confer with a bankruptcy attorney regarding what matters will not be halted by your filing. Some of the more common examples of matters that can continue even though you filed for bankruptcy include certain family court matters, criminal court proceedings, and tax audits.

If you have a creditor that has a secured debt (a loan where you pledged an asset as collateral for the lender), it is important to understand that the creditor has the right to file a motion and ask the court to lift the stay as it applies to that lender’s specific debt. There are certain requirements that must be met for the court to grant this type of motion. If the court grants the creditor’s motion, the stay is lifted as to that creditor and the debt at issue. This means that the creditor can proceed with certain actions against you and/or the asset pledged as collateral. For example, if you fail to pay your car loan and you do not have insurance coverage on it, the bankruptcy court may permit your lender to repossess the vehicle.

Although the bankruptcy laws were designed to primarily protect debtors, they also set forth many safeguards for creditors as well. If you are concerned with how the automatic stay will apply to your debt and the collection actions being taken against you, contact us today.

If you have questions about filing for bankruptcy protection, we have the answers. Call us today to schedule your initial consultation. Our office is located in Melbourne, but we proudly serve individuals and businesses across the State of Florida.

Will Filing Bankruptcy Stop ALL Lawsuits?

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If you have lawsuits filed against you, it may be time to consider filing a personal bankruptcy case. A personal bankruptcy case can be an effective way to eliminate certain collection lawsuits. However, it is important to understand that not all types of litigation are halted or eliminated in a Chapter 7 or Chapter 13. Below are a few examples of suits that are not stopped by your filing:

Family law matters. If you are involved in a case that involves a determination of child support, spousal support, or the establishment of paternity, your bankruptcy filing usually will not stop the family law court from proceeding with its case.

Criminal proceedings. You cannot halt a criminal proceeding by filing for bankruptcy protection. However, if the charges against you include a debt that is related to your criminal charges, that portion of the case against you may be halted by the automatic stay.

Tax proceedings. The law provides that the Internal Revenue Service (IRS) has the ability to continue pursuing certain audits, issuing tax deficiency notices, demanding tax returns, or issuing tax assessments against a debtor in bankruptcy. The automatic stay will prevent the IRS from issuing tax liens, repossessing property, or seizing your income will your bankruptcy case is pending.

Pension loans. A debtor is allowed to have funds withheld from his or her wages to repay a loan from certain types of pensions.

If you are planning to file a bankruptcy case and you have lawsuits or forms of legal proceedings filed or pending against you, contact us to discuss what will or will not be affected by the automatic stay. We can review all of the cases pending against you and make sure you understand what your bankruptcy filing will mean in each matter. We can also confer with the other parties involved if necessary so everyone is on the same page regarding your case.

The above are just a few examples of the types of legal proceedings that are not halted by the automatic stay. If you are interested in learning more about how a bankruptcy filing will impact your debt or the lawsuits pending against you, contact Faro Crowder, PA to schedule an appointment.

How the Automatic Stay is Impacted by Multiple Filings

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If you have previously filed for bankruptcy protection and you are considering filing another case, it is important to understand that there are certain guideline for when and how you can do it.

The court looks at what type of case you filed the first time and whether you received a discharge of your debts to determine whether you qualify to file a second bankruptcy case,. In the majority of the cases, you can file a new bankruptcy case at any time if your prior filing was dismissed and you did not receive a discharge order from the court.

If your first case was a Chapter 7 and you obtained a discharge order from the court, you can:

  • file another Chapter 7 case and receive a discharge after 8 years from the petition date of your first case.
  • file a Chapter 13 bankruptcy and receive a discharge order after 4 years from the petition date of your first case.

If your first case was under Chapter 13 and you received a discharge from the court, you can:

  • file a Chapter 7 bankruptcy and receive a discharge order after 6 years from the petition date of your first case.
  • file another Chapter 13 bankruptcy after 2 years have passed from the time you filed the petition in your first case.

You should also be aware that if you have filed two or more bankruptcy cases that were dismissed within one year, the automatic stay will not be effective upon the filing of a subsequent case in the same year. This means that although you have filed bankruptcy, collection actions against you can continue until you have met certain requirements.

It is important to note, however, that there are consequences for filing more than one personal bankruptcy. A little-known penalty is that if you have had two or more bankruptcy filings dismissed within one year, the automatic stay does not go into effect in a subsequent case filed in that same year. In other words, none of your creditors are barred from continuing their collection efforts against you….at least until you meet certain conditions. To learn more, please read our blog titled “Serial Bankruptcy Filers – What You Should Know.”

If you have previously filed for bankruptcy relief and you are considering filing against, let us help. The legal team at Faro & Crowder is ready to help. Our office is located in Melbourne, but we proudly serve businesses across the State of Florida.

Debt Collection after Bankruptcy

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One of the primary benefits of seeking bankruptcy protection is that the automatic stay stops all collection efforts against you. Once you have completed your case and obtained your discharge order, your dischargeable debts are eliminated and collectors are barred from taking any collection actions against you to recover the discharged debts. Unfortunately, this does not always mean that collectors won’t attempt to contact you. If this happens, below are a few suggestions on how to handle it:

  • Stay calm – in many cases, the collector has made an error that can be resolved.
  • Look over your bankruptcy pleadings and verify that the creditor was included in your filing and given notice of it.
  • Confirm that your discharge order was entered and filed with the bankruptcy court. If you don’t know if you received your discharge, contract your bankruptcy lawyer or the court clerk for help. You should be sure to keep a copy of your discharge order with your important documents.
  • It is important that you understand that certain types of debts are not dischargeable. You must confirm that the collector is not attempting to collect a debt that was not discharged in your case. Most consumer debts such as credit card and medical debt is dischargeable.
  • Once you verify that the creditor was included in your bankruptcy case, the debt the collector is attempting to collect was discharged, and your received your discharge order, contact the creditor and inform them.
  • To be safe, we recommend confirming your conversation with the debt collector in a follow-up letter and providing them with a copy of your discharge order. Be sure to keep a copy of this letter for your records.

The above steps should resolve the issue. However, if you take the above measures and the collector continues to contact or harass you, contact us for help. A creditor or collector that continues to ignore your bankruptcy discharge can be held liable by the court. The legal team at Faro & Crowder is ready to help. Our office is located in Melbourne, but we proudly serve businesses across the State of Florida.

How will I be Impacted by my Ex-Spouse’s Bankruptcy?

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What happens if your ex-spouse files a bankruptcy case? Will it impact you? The answer is “it depends.” It is important to have one of our bankruptcy lawyers review your individual circumstances to help you understand how you might be affected, but below is some general guidance.

As soon as your ex-spouse files his or her Chapter 7 or Chapter 13 case, the automatic stay goes into effect and protects him or her from any collection efforts by creditors. Your ex-spouse will likely be permitted to discharge or eliminate the majority (if not all) of his or her debt – including the debt your ex agree to pay in the divorce agreement. This may result in you being liable for some of the marital debt that was not assigned to you in the divorce order because your name is still on the loan documents. It should also be noted that if your state uses community property laws, it can impact how your ex-spouse’s bankruptcy filing impacts you.

You may be wondering if your divorce decree protects you. The divorce order is a contract between you and your ex-spouse. In other words, your creditors usually are not bound by the terms of the divorce decree, unless your creditor or lender agreed to the terms of it and removed you from liability for the financial obligation Thus, what was owed by you and your ex-spouse prior to the divorce can still be owed by both of you after the divorce, regardless of what the divorce decree provides. Once the creditors are unable to take collection action against your ex-spouse, they will likely start trying to collect from you.

If your ex-spouse informs you that he or she intends to file a personal bankruptcy and you have a significant amount of joint debt, you may want to consider filing your own Chapter 7 or Chapter 13 case.

If you are interested in learning more about how your ex-spouse’s bankruptcy filing will impact you, contact Faro Crowder, PA to schedule an appointment.

What is the Co-Debtor Stay in Bankruptcy?

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Faro & Crowder, PA Bankruptcy & Foreclosure Attorneys

When you file a bankruptcy case, you obtain the benefit of the automatic stay. If you file a Chapter 13 bankruptcy, you are also given the “co-debtor stay.” The automatic stay prevents creditors from taking collection actions against you, while the co-debtor stay prevents collection against your family, friends or others who co-signed loans with you. The automatic stay and the co-debtor stay can remain in place while your Chapter 13 is pending.

It is important to note that the co-debtor stay does not change or eliminate your co-borrower’s liability to pay the loan. Their financial obligations remain intact, but the creditor cannot use collection efforts against him or her while your Chapter 13 case is active (without court approval). Additionally, a Chapter 7 case does not provide you with the co-debtor stay.

As with most general rules, there are some exceptions to the application of the co-debtor stay. If a debt was incurred in the “ordinary course of business” by the debtor, the stay does not prevent collection efforts against the co-debtor.

Pursuant to 11 U.S.C. §1301, the co-debtor stay applies if (i) the primary debtor files a Chapter 13 case, (ii) the debt is a consumer debt (not a business debt), (iii) the co-borrower is an individual, (iv) the co-borrower did not become liable on the debt in the ordinary course of business, and (v) the Chapter 13 case was not dismissed, closed or converted to a Chapter 7 or Chapter 11 case.

If the above criteria are met, the co-debtor stay can be effective for the full term of the Chapter 13 plan (which is three to five years).

If you are interested in learning more about filing a Chapter 13 bankruptcy or the co-debtor stay, contact one of our seasoned bankruptcy attorneys to schedule your appointment.

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