AUTOMATIC STAYS - STOCKTON, CA

• When you file for bankruptcy, an automatic stay goes into effect immediately, providing relief from creditor actions. However, the duration of the stay depends on the type of bankruptcy you file and other circumstances.
• Duration of an Automatic Stay in Chapter 7 vs. Chapter 13
  • Chapter 7 Bankruptcy: The automatic stay typically lasts 3 to 4 months until the case is discharged or closed.
  • Chapter 13 Bankruptcy: The automatic stay remains in effect throughout the repayment plan, which usually lasts 3 to 5 years, as long as payments are made on time.
• Situations Where the Automatic Stay May Be Lifted Early
  • A secured creditor (such as a mortgage lender or car loan provider) can petition the court to lift the stay if payments are not being made.
  • If a court finds that the bankruptcy was filed in bad faith, the stay may be lifted or denied.
  • If a debtor does not meet filing requirements or fails to provide necessary documents, the case may be dismissed, ending the automatic stay.
• How Multiple Bankruptcy Filings Affect the Length of an Automatic Stay
  • If you file for bankruptcy within one year of a previous dismissal, the automatic stay lasts only 30 days unless extended by the court.
  • If you have two or more bankruptcy dismissals within a year, the automatic stay does not take effect at all unless the court grants special permission.

What Debts Are Not Covered by an Automatic Stay?

While an automatic stay stops most collection efforts, some debts are not affected. These include:

• Child support and alimony payments – Bankruptcy does not relieve obligations related to family support. Payments must continue even after filing.
• Criminal proceedings and fines – The government can continue to collect court-ordered fines, restitution, or penalties.
• Some tax debts and government-related obligations – Certain IRS actions, such as audits or tax return filings, may proceed despite the automatic stay.

Exceptions to the Automatic Stay

In some cases, creditors may request the court to lift the automatic stay, allowing them to continue collection efforts.

• When Can Creditors Request to Lift the Stay?
  • If a debtor falls behind on mortgage or car payments, secured creditors may petition to foreclose or repossess property.
  • If a landlord has already obtained an eviction judgment before the bankruptcy filing, they may proceed with the eviction.
  • Creditors may argue that the debtor has no equity in the property, meaning the stay only delays repossession rather than protecting the asset.
• How Secured Creditors May Still Proceed with Foreclosure
  • Mortgage lenders can request relief from the automatic stay to continue foreclosure proceedings if payments are delinquent.
  • If the debtor fails to comply with a Chapter 13 repayment plan, the lender may resume foreclosure efforts with court approval.
  • Understanding the limits and exceptions of an automatic stay is essential when filing for bankruptcy. Seeking legal guidance can help you maximize the protections available under bankruptcy law.

Frequently Asked Questions About Automatic Stays

Can an automatic stay stop wage garnishment?

• Yes. When you file for bankruptcy, an automatic stay immediately stops most wage garnishments. However, garnishments for child support or alimony will continue despite the stay.

Will an automatic stay prevent utility shut-offs?

• In most cases, yes. If you are behind on utility bills, the automatic stay can temporarily prevent services like electricity, water, or gas from being shut off. However, you may still need to make payments to keep your services active in the long run.

 Can an automatic stay stop an eviction?

• It depends. If the landlord has not yet obtained a court-ordered eviction, the automatic stay may pause the process. However, if an eviction judgment has already been issued, the landlord can proceed with eviction despite the bankruptcy filing.

Can an automatic stay stop a lawsuit against me?

• Yes, an automatic stay halts most lawsuits, including those related to debt collection. However, criminal cases, child support enforcement, and some tax-related lawsuits may continue.

Does an automatic stay apply to student loans?

• The stay temporarily stops collection efforts on student loans, such as wage garnishment and lawsuits. However, student loans are not automatically discharged in bankruptcy, meaning payments may resume once the case is closed.

What happens if a creditor violates the automatic stay?

• If a creditor continues collection efforts after the automatic stay is in place, they may be subject to legal penalties. You can report the violation to the bankruptcy court, and the creditor may be required to pay damages.

Can an automatic stay be extended?

• In some cases, yes. If you have had a previous bankruptcy case dismissed within a year, the stay may only last 30 days. You can request an extension from the court by proving that your bankruptcy filing was made in good faith.

Stop creditor harassment and protect your assets with an automatic stay. Contact us now at (209) 243-7560 for a free consultation!