Automatic Stays in Bankruptcy

Dedicated DuPage County Bankruptcy Lawyers Assisting Debtors

At The Bankruptcy Center of Illinois, our diligent attorneys represent individuals filing for bankruptcy. Bankruptcy is an option for people facing financial situations in which they need relief from debt. One benefit of filing for bankruptcy is the protection provided by an automatic stay. After filing for bankruptcy under Chapter 7, Chapter 11, or Chapter 13, an automatic stay pauses the actions of creditors and agencies seeking to collect debt or pursue a lawsuit. As an injunction, the court orders an automatic stay when the bankruptcy case is filed. Securing an automatic stay is significant, as it pauses creditor harassment and wage garnishment. It also provides an opportunity to assess finances in order to discharge debt. By working closely with clients throughout DuPage County and surrounding areas, our automatic stay lawyers help people seeking to understand and pursue the best course of action for their circumstances.

Automatic Stays in Bankruptcy Filings

An automatic stay protects debtors against the actions of collection agencies and creditors. In other words, an automatic stay is a legal halt to collection efforts. When the federal court orders an automatic stay, all parties in a lawsuit must stop their action against the individual who filed for bankruptcy. The stay remains in force and in the event that there is another action against the debtor, the act would be voidable. An example may be a foreclosure sale that occurs after the automatic stay has taken effect. This sale would not have legal consequences, it would be considered void. In the same way, an eviction would not have an effect. There are exceptions, such as if a landlord claims you have endangered the property.

There are debts that cannot be discharged and will not be affected by an automatic stay. If there is a lawsuit against you that seeks to collect child or spousal support, for example, the lawsuit may proceed. Criminal proceedings are not typically stopped by an automatic stay. A qualified bankruptcy attorney can help you understand if certain actions or collections would be blocked by the automatic stay.

In most situations, the automatic stay remains in place for the duration of the bankruptcy proceedings. During this period, nonessential assets are usually sold in a Chapter 7 filing in order to pay debts. Debts are restricted in a Chapter 13 filing. There may be circumstances that change the duration of an automatic stay, such as a creditor seeking to lift a stay.

It is important to note that special rules apply to debtors who previously filed for bankruptcy within the previous year and had their case dismissed. An experienced bankruptcy attorney can assist in this situation.

Creditors May File a Motion to Lift the Automatic Stay

A creditor may seek to remove or lift the automatic stay. A stay motion may be granted if the creditor can convince the court there are legitimate reasons to modify or lift the stay. For instance, creditors that intended to repossess collateral due to failure to make payments may request the court lift the stay. This is common in situations involving secured debt, such as an auto loan. The creditor may have standing to file a lift stay motion. Debtors are encouraged to make their regularly monthly payments to avoid the situation in which the creditor asks for repossession.

Automatic stays temporarily stop foreclosure proceedings. If you are facing a potential foreclosure, filing for Chapter 13 bankruptcy may be advantageous. A bankruptcy lawyer can help you assess whether Chapter 7 or Chapter 13 bankruptcy is more appropriate.

Receive Bankruptcy Advice and Representation Regarding Automatic Stays in DuPage County

At the Bankruptcy Center of Illinois, we advise clients as to whether an automatic stay in bankruptcy will help their financial situation. Exploring all options is important, and we make it a priority to explain alternatives to bankruptcy in a matter that makes sense to our clients. We are proud to serve people throughout DuPage County as well as the localities of Cook County including Chicago, Mount Prospect, Oak Lawn, Berwyn, Hoffman Estates, Oak Park, and Schaumburg. Call our office today at (773) 993-0024 or complete our online form.