The moment a consumer files for bankruptcy, such as Chapter 7 or Chapter 13, an automatic stay usually takes effect immediately.
Automatic suspension temporarily stops most judgments, collections, foreclosures and repossessions of consumer assets known as bankruptcy estate. However, there are some limitations and exceptions.
What the automatic stay covers
As long as the debt or litigation arose prior to filing for bankruptcy, the automatic suspension is usually suspended:
But automatic residence does not apply to some things, such as child and domestic help, some tax obligations and criminal penalties.
How long does the automatic stay last?
The automatic suspension usually lasts until insolvency proceedings are completed or rejected, or until discharge is granted – ie the debt is forgiven – or until discharge is refused.
The bankruptcy judge can also lift a suspension at the request of a creditor who applies for discharge (more on this in the next section) or if a certain item no longer belongs to the bankruptcy estate.
However, the stay may be shorter or not applicable:
If you file for bankruptcy within a year of a previous bankruptcy rejection, the automatic stay is only 30 days.
If you submit a third time within a year, no automatic stay will be granted.
When you think you Repeat insolvency registrations repeat If you are in good faith and there is evidence of it, you can apply to the court for automatic suspension or renewal. It is best to seek legal advice every time you submit an application to ensure that it is done correctly and that you have the best chance of a positive outcome.
This is how you combat a request for exemption from automatic residence
If a creditor wants to move in despite the automatic suspension, he must submit an application to the court for the suspension to be lifted. This action is most commonly used by creditors of secured debts or debts that are secured by collateral, such as:
The obligee must duly terminate and hear from you. It is the responsibility of the obligee to demonstrate to the bankruptcy court that there is a valid reason to lift the suspension.
Tackling a creditor’s request for discharge can be complicated; the best option is to hire your lawyer or find a bankruptcy lawyer if you don’t already work with one. You want to make sure that the proper paperwork is filed and deadlines are met.
If a creditor is successful and the court grants the motion to lift the suspension, that creditor can immediately resume debt collection efforts against you.
What to do if a creditor ignores the automatic suspension?
If you are still being contacted, make sure the creditor knows you have filed for bankruptcy. Also, check that the debt is on your list of debts and creditors filed with the bankruptcy court and that it is covered by the automatic suspension.
The Consumer protection office recommends documenting all correspondence with creditors. If you are represented by a lawyer, the creditors will not be able to contact you and will have to communicate with your lawyer instead.
If a creditor persists with debt collection efforts, you or your attorney should notify the bankruptcy court. If the court determines that the collector has violated the automatic suspension order, the court may pay him damages, fines, or legal fees.