The “automatic stay” is one of the most important benefits people get from filing bankruptcy.  The stay will go into effect the moment the case is filed, and it stops creditors from any collection efforts against the debtor.  You get a temporary safe harbor from debt collectors — the phone will stop ringing, the repossession stops, etc.  The stay is applicable in every bankruptcy filing, regardless if you file Chapter 7, 11, or 13.

The automatic stay, as wonderful as it sounds, is not without its limitations.  The stay does not protect you from every financial issue you may have when you file bankruptcy.  Tax audits, family court proceedings, and criminal court proceedings will continue against you despite the automatic stay.

Creditors can also request that the bankruptcy court “lift” the stay so they can proceed with their actions against a debtor. For example, if you fail to pay your car loan and do not keep current insurance coverage on your vehicle, the court may, if the lender requests, lift the stay and allow repossession.  Similarly, failing to pay your mortgage after filing a bankruptcy case will bring the lender into bankruptcy court with a motion to lift the stay, and if granted, the lender can proceed with a foreclosure.

The bankruptcy laws can give a debtor protection, but they also balance the needs of creditors.  If you are going to file bankruptcy, you should talk to a lawyer about which types of legal actions may not be stayed and which creditors will likely seek relief from the stay to proceed against you.

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