Automatic Stay in Bankruptcy

When a debtor files for bankruptcy, he gets protected by an automatic stay in bankruptcy.

An automatic stay provides a debtor or debtors who have filed for bankruptcy legal protection from the creditors who want their owed money back.

Until the bankruptcy case is discharged or becomes official by the completion of the court procedure, the automatic stay continues and protects the debtor.

Typically, the automatic stay in bankruptcy comes into effect when filing for bankruptcy and continues until the time the case is discharged.

However, this rule has certain exceptions. For example, if the debtor had filed for bankruptcy at any time in the year before the current year of filing and got that case dismissed before completion, then the duration of the automatic stay is only 30 days.

With this rule, people who want to protect themselves by automatic stay but have no intention of filing for bankruptcy can be prevented from doing so.

Sometimes a case may take a longer time to get completed while there is an urgent need to repay a debt.

In such a case, the creditor can request the judge to lift the automatic stay. This lifting is done only for that one creditor and gives him the legal right to repay his owed debts.

However, this can be done only by a judge’s order after furnishing a good reason for it.

Take action

If you have debts more than you can repay, then the bankruptcy process provides you protection.

However, there are many legal complexities involved in these proceedings, and consulting with a lawyer can benefit you.

 

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