What is an automatic stay?
An automatic stay is created when a person files for bankruptcy under either Chapter 7 or Chapter 13.
While it is in effect, creditors cannot: • Try to bring a claim against you
• Try to enforce a judgment against you
• Try to gain property from you
• Try to create, protect or enforce any sort of lien against you
• Try to collect debts from you
In short, while you are protected by the automatic stay, you are safe from creditors. If they violate this stay, then they are liable for damages. It is important to give your creditors notice that you filed, so as to prevent them from harassing you as quickly as possible.
This protection is not absolute, unfortunately. It does not protect you against:
• criminal proceedings
• family support obligations
• losing a license
• creditors collecting from property that is not part of your estate
• the interception of a tax refund
• tax audits, being given notice of tax deficiency, demands for tax returns, or demands for payment of taxes (this only works on taxes that are not discharged)
The stay remains in effect until:
• the case is closed or dismissed
• discharge is granted or denied under Chapter 7 bankruptcy
• the property with a claim on it is no longer part of the estate
• the court acknowledges a request from a creditor to release the stay
In a Chapter 7 bankruptcy, the stay is replaced by a permanent injunction when the case is discharged, as part of the total discharge of debt. In a Chapter 13 bankruptcy, the stay remains until the completion of the Chapter 13 plan.
If you had filed once already this year and had it dismissed, then the stay is limited to 30 days. If you have filed at least twice this year and they were both dismissed, then you do not get a stay.