How the automatic stay works and handling violations

On Behalf of | Jun 25, 2021 | Personal Bankruptcy

Bankruptcy can lift the burden of debt for Arkansas consumers by liquidation under Chapter 7 or debt repayment under Chapter 13. If you get behind on payments, you commonly find yourself getting many phone calls from creditors. One benefit of filing either type of bankruptcy is the automatic stay, but some creditors may violate it.

Overview of the automatic stay

The automatic stay in personal bankruptcy temporarily prohibits creditors from suing you or seeking further collection action against you. The automatic stay activates as soon as you file a bankruptcy petition and stays effective for 30 days.

However, there are some exceptions to the rule to prevent abuse of the automatic stay. You won’t get the stay if you file more than two cases within one year or had a case dismissed within a year of the current filing.

The automatics stay does not halt certain debt obligations, such as child support, pension loans, and past due taxes. A creditor can also request a lift of the stay if they believe fraud occurred.

What to do if creditors violate the stay

Ensure the creditor made an accidental breach, because it is more likely they didn’t contact you intentionally after getting notice. In some cases, the business or person may not understand how an automatic stay works.

If the creditor contacts you after the filing, provide your case number and the court where you filed it. It is best to send them this documentation by certified mail instead of going through the court, which takes longer. Explain the terms and offer to send them a copy of the notice. If they contact you several weeks after filing, remind them and make notes and recordings of calls.

While most creditors aren’t malicious, others may still try to garnish wages and or keep seized property. If you feel a creditor violated the automate stay or doesn’t have a legal reason to lift it, contact an attorney.