Does Automatic Stay In Bankruptcy Stop Creditor Harassment?

Automatic Stay In Bankruptcy

When you’re struggling with debt, creditor harassment can be a significant source of stress. This is where the concept of an “automatic stay” comes into play. An automatic stay is a powerful feature of filing for bankruptcy that offers immediate relief to debtors just like you. Let’s delve into what it means, how it works, and its implications on creditor harassment.

What Is An Automatic Stay?

The automatic stay is a legal provision that takes effect the moment a bankruptcy case is filed. Under 11 U.S.C. § 362 of the Bankruptcy Code, the automatic stay immediately halts most creditors from pursuing collection activities against you. This is one of the primary protections offered by the bankruptcy process.

How Does Automatic Stay Work?

The automatic stay puts a temporary “freeze” on all collection efforts. It prevents creditors from taking any new actions to collect debts and stops many forms of creditor harassment. This includes both chapter 7 and chapter 13 cases. Here’s what creditors cannot do once the automatic stay is in place:

  • Commence Or Continue Lawsuits: Legal actions already in process must come to a halt.
  • Wage Garnishments: Any ongoing wage garnishment must stop unless it’s for domestic support obligations.
  • Foreclosure Or Repossession: Efforts to take possession of property secured by a loan, like a house or car, are paused.
  • Disconnecting Utilities: Utility companies cannot disconnect service for at least 20 days.
  • Evictions: If a landlord is evicting you for nonpayment, the automatic stay may temporarily halt the process.

Impact On Creditor Harassment

One of the most immediate benefits of an automatic stay is the cessation of creditor harassment. Once you file for bankruptcy, creditors are prohibited from:

  • Calling You: They cannot contact you by phone to demand payment.
  • Sending Letters: All written communication attempting to collect a debt must stop.
  • Emailing Or Texting: Any electronic communication with the intent to collect a debt is not allowed.

Exceptions To The Automatic Stay

There are some exceptions to the automatic stay. Certain types of debts and proceedings are not affected. For instance, the automatic stay does not stop:

  • Child Support And Alimony Proceedings: You must continue to make these payments.
  • Specific Tax Proceedings: The I.R.S. may audit you, demand a tax return, issue a tax deficiency notice, or assess a tax and demand that you submit payment.
  • Multiple Filings: If you had bankruptcy cases dismissed within the previous year, the stay might be limited or non-existent.

Duration Of The Automatic Stay

The automatic stay remains in effect until:

  • Your Bankruptcy Case Is Closed: Once the bankruptcy process concludes, the stay is lifted.
  • Your Debts Are Discharged: If your debts are wiped out, creditors covered by the discharge can no longer collect.
  • The Bankruptcy Court Lifts The Stay: In some cases, a creditor may successfully ask the court to remove the stay concerning their debt.

What To Do If A Creditor Violates The Automatic Stay

If a creditor continues to harass you after the automatic stay is in place, they may be violating the law. Here’s what you can do:

  • Notify The Creditor Of Your Bankruptcy Filing: Provide them with the case number and filing date.
  • Keep Records Of All Harassment: Document any communications from creditors.
  • Contact Your Bankruptcy Attorney: They can advise you on steps to take, which may include bringing the matter before the bankruptcy court

Check out Our Oklahoma Bankruptcy Law Blog For Great Articles Regarding The Process

Bankruptcy Lawyers Near You

The automatic stay in bankruptcy is a crucial tool that gives debtors breathing room. It effectively stops creditor harassment, giving you the peace you need to work through your bankruptcy case. While it’s a powerful provision, it’s important to understand its limitations and exceptions.

If you are considering bankruptcy and want to understand how the automatic stay would apply to your situation, it’s advisable to consult with a bankruptcy attorney. We provide guidance tailored to your circumstances and ensure your rights are protected throughout the bankruptcy process. Remember, the ultimate goal of bankruptcy is to help you regain your financial footing and move towards a more stable economic future. For personalized advice and representation on this matter, don’t hesitate to reach out to our Tulsa Oklahoma bankruptcy lawyers at Kania Law Office at (918) 743-2233 or online.

Tulsa's Local Bankruptcy Lawyers

Law ScaleAre you looking for Tulsa attorneys who will fight aggressively for you? Our team of bankruptcy attorneys have the experience needed in Oklahoma law to secure the outcome you deserve.

Call us today for a free consultation 918-743-2233 or contact us online.