The automatic stay offers instant peace of mind after a bankruptcy filing
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As soon as you file bankruptcy – whether you file Chapter 7 or Chapter 13 – the “automatic stay” kicks in. This is important because it is the first step in obtaining peace of mind over your debts and gives you breathing room to get your financial house in order. But what exactly is the automatic stay, how long does it last and how does it differ between Chapter 7 and Chapter 13? Here's what you need to know...
What Is the Automatic Stay?
The automatic stay is a protection afforded to all bankruptcy filers to shield them from collection efforts by creditors. Once the stay is enacted, all contact must cease. If you are behind on your payments for a debt, you are likely being plagued by collection calls, letters and possibly even threats and harassment.
This can make life difficult and if the calls hound you at work, can make you frightened that you could lose your job. The automatic stay grants you an immediate cease-fire with your creditors. The stay also stops most garnishments, lawsuits, foreclosures and repossession efforts. An example of a garnishment or collection that would not stop is one for child support.
How Do Your Creditors Learn About the Automatic Stay?
It's important that you list all of your creditors – every single one of them – in your bankruptcy filing even if you intend to pay the debt rather than asking that it be discharged or diminished in bankruptcy. Once your bankruptcy is filed, all of the creditors will be notified and this will alert them to stop all collection efforts.
If you leave a creditor off the list, they will not know and you may not be protected. If a creditor contacts you after you file for Chapter 7 or 13 but before notices are received, you simply notify them that you have filed and give them the case number and if they request it, contact information for your bankruptcy attorney.
The road to financial recovery starts with the bankrutpcy automatic stay
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How Long Does the Automatic Stay Last?
The length of the automatic stay will vary by your state and circumstances. If you have filed a prior bankruptcy in the last 12 months which was dismissed, your stay will only last 30 days. If you've filed two or more recent bankruptcies that were dismissed, you will not get a stay. Typically, though, the automatic stay lasts as long as the bankruptcy case.
What Is the Difference Between Automatic Stay in Chapter 7 vs Chapter 13?
With a Chapter 7, the bankruptcy stay lasts while you file and go through all of the meetings and court hearings and up until you get your discharge. And for those debts that were discharged, the stay is permanent (but will then be called an injunction). For those debts not discharged in bankruptcy such as a student loan, taxes or other debts, collection efforts can resume after your discharge.
For a Chapter 13, the stay will be in force throughout your repayment period which can be several years. Once you fulfill your obligation, remaining unsecured debts may be discharged and other debts should be under control because of the repayment structure initiated by the Chapter 13 itself. But once the case is discharged upon fulfillment, the stay is done and any debts not discharged or dealt with can resume collections efforts.
In some cases, creditors can request that the court lift the automatic stay so they can continue to collect on the debt. If this occurs, you need a reputable and experienced bankruptcy attorney on your side fighting to protect you. The attorneys at the law offices of John T Orcutt are ready to help you file a successful North Carolina bankruptcy. Contact us today for a free consultation.