Bankruptcy and the Automatic Stay: What it is and How it Can Help You

Bankruptcy and the Automatic Stay: What it is and How it Can Help You

An automatic stay can be one of the most helpful aspects of bankruptcy. This process can help you escape the negative consequences of unpaid debt. Learning more about how this works and the benefits involved may help you decide whether to file for bankruptcy. Consulting with an experienced Chattanooga bankruptcy attorney may help speed up this process.

Benefits of Automatic Stay

An automatic stay is a legal protection against those who owe a debt to creditors. This automatic stay prevents creditors from taking any actions to make you pay your debts owed to them. Automatic stays usually go into effect after filing for bankruptcy, and not all automatic stays require a court order.

Creditors do not need to be notified of the automatic stay. However, some bankruptcy cases may require a court order for an automatic stay to go into effect. Certain types of bankruptcy cases or situations may not allow an automatic stay. Consult with a bankruptcy lawyer to learn more.

The benefits of automatic stay revolve around stopping creditors from collecting the debt you owe. This gives you time to work on escaping debt through bankruptcy rather than rushing through the process. After filing a petition for bankruptcy, the automatic stay usually goes into effect and protects you from the following:

  • Creditors harassing you to make payments

  • Filing collecting claims against you

  • Foreclosure

  • Repossession

  • Creating liens

However, an automatic stay may not last forever. Some automatic stays expire after a certain amount of time or after certain actions are taken. Creditors have the ability to file claims to stop automatic stays. If this happens, creditors can start making efforts to collect the debt you owe. This may turn into calls, repossession, or foreclosure.

How Automatic Stay Works in Bankruptcy

Learning how automatic stay works in bankruptcy can help you navigate the steps of this process. An automatic stay is often initiated after a bankruptcy petition is filed. Automatic stays can be removed in situations when:

  • The bankruptcy case is closed

  • The bankruptcy claim is denied

  • Debts are discharged in bankruptcy

  • Debt discharge is rejected

  • A property is no longer a property of an estate

  • A property is transferred

  • A property is abandoned

  • Creditors are given permission to create a lien on the property

An automatic stay may also be removed when a failure to act occurs. This can look like refusing to cooperate with repossession when this was requested before a bankruptcy petition was filed. In certain situations, those who do not owe debt may but who could be affected by the person filing for bankruptcy may also be protected by an automatic stay. Contact a lawyer to learn more.

Call Tom Bible Law for Legal Help

Navigating the complex processes of bankruptcy can be challenging. Start by calling us at Tom Bible Law by dialing (423) 424-3116 for a consultation about your options with bankruptcy and automatic stay. Our experienced team of Tennessee bankruptcy lawyers can work with you to figure out the bankruptcy process. We serve clients throughout the Tennessee cities of Chattanooga and Tullahoma.

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