The automatic stay that kicks in once the filing party files for bankruptcy protection applies regardless of the type of bankruptcy the filing party files for. It can provide some immediate relief for the filing party from creditors and creditor calls while they are going through the bankruptcy protection process.
Who does the automatic stay protect from?
The automatic stay stops lawsuits and collection efforts against the filing party. The automatic stay applies to:
- Creditors of the filing party;
- Collection agencies;
- Government entities; and
- Any other party seeking money from the filing party.
What can the automatic stay protect from?
While the filing party is going through the bankruptcy process the automatic stay can provide protection by:
- Stopping wage garnishment;
- Stopping utility disconnection;
- Stopping eviction;
- Stopping foreclosure; and
- Stopping recovery of overpayment of public benefits by a government agency.
The automatic stay is generally in place once the filing party files for any form of personal bankruptcy protection and is not lifted until the bankruptcy process is completed and the bankruptcy judge has provided a debt discharge for the filing party. In some situations, a creditor may seek a court order to life the automatic stay and the automatic stay does not provide protection against all types of debts such as tax debts or past due child support payments, for instance.
Understanding what the automatic stay protects against is important because it is a critical layer of protection for filers for Chapter 7 bankruptcy or Chapter 13 bankruptcy who are seeking debt relief through the process. It allows the filing party a measure of relief as they pursue longer term debt relief through the personal bankruptcy protection process.