An automatic stay is an injunction that halts any creditor action once a debtor formally files for bankruptcy. This means that a creditor is legally prohibited from directly contacting, pressuring, and harassing a debtor for payments. The purpose of an automatic stay is to allow the bankruptcy court time to thoroughly review the debtor’s estate. During this time, any creditors involved in the bankruptcy case have to play by the rules of the court. For example, one creditor can’t take priority over the others by pressuring a debtor into settling before the case is complete. This can compromise the debtor’s bankruptcy case and put the other creditors in a difficult position.
An automatic stay protects a debtor from the following creditor actions:
- Wage garnishment
- Property repossession
- Creating or enforcing a lien
An automatic stay also protects a debtor from:
- Utility disconnect
- Collection of delinquent taxes
- Over-payment of public benefits
An automatic stay remains in effect until a debtor’s bankruptcy case is complete and their debts are effectively discharged.
What Happens if a Creditor Willfully Violates the Automatic Stay?
There are countless forms and documents that a debtor needs to complete before initiating the bankruptcy process. One of these documents is a creditor matrix, which essentially functions as a mailing list. The bankruptcy court uses the creditor matrix to notify your creditors that you’ve filed for bankruptcy and are protected by an automatic stay. If you accidentally leave a creditor off your list, they can continue their collection actions with the excuse that they’re unaware of the automatic stay. It’s vital that you keep a detailed record that proves your creditors have been given adequate notice.
If you’re still being harassed by a creditor after filing for bankruptcy, it’s imperative that you discuss your circumstances with a bankruptcy attorney as soon as possible. At Bach Law Offices, our Northbrook bankruptcy lawyers can help you file a complaint that proves the creditor received notice of your bankruptcy and is still taking collection actions.
Take the First Steps to Living Debt-Free
Call the Northbrook bankruptcy attorneys at Bach Law Offices if you’re interested in filing for bankruptcy or have concerns about your creditors. We can discuss your legal options, address your concerns, and effectively guide you through each step of your bankruptcy case. We can also advocate for your interests as a protective presence if any creditors attempt to violate the bankruptcy code.
Explore your bankruptcy options today. Call Bach Law Offices at (847) 448-0025 to schedule a free, no-obligation consultation.