Benefits of an Automatic Stay for the Debtor
An Automatic Stay grants people peace of mind to slow down and figure out their next step by presenting the debtor time to organize their finances through bankruptcy. Debtors facing evictions or car repossessions receive emotional relief and time to plan their next step. The harassing phone calls and emails will stop, and you can solve your financial issues with a clear head. It is important to note that filing for bankruptcy to get an Automatic Stay to avoid eviction will not make the debt go away; it will only kick the can down the road. If you are in arrears on your mortgage payment, you must find a way to pay back the amount owed to bring your account current before lifting the Automatic Stay to keep your home.
Willful Violations (11 USC 262 Subsection k): Individuals injured by willful violations of a stay may recover damages. If a creditor is well aware of your Automatic Stay but still attempts to collect or harass you for collections, they can be subjected to punitive damages by the court. The creditor must first rectify any damage they may have caused and can also face sanctions if they deliberately and intentionally violate the Stay. Sometimes creditors are unaware of the bankruptcy filing, and a warning is sufficient to change their actions. However, those creditors who violate the law can be subject to paying damages and attorney fees to the debtor.
The Automatic Stay will last as long as your bankruptcy is ongoing and until your case is either discharged or dismissed. Depending on the debtor's debts, the value of their assets can affect how the automatic Stay will last and play out. Ultimately, a Chapter 7 will be much shorter than a Chapter 13 bankruptcy for an automatic stay.
For a Chapter 7 bankruptcy, this will typically mean 3-4 months as the entire bankruptcy process only takes that long before discharge. Because the timeframe is much shorter, creditors only sometimes need to file a motion for relief from Stay. The debtor will usually either surrender the secured asset back to the creditor or retain and pay it through a reaffirmation agreement.
Chapter 13 Automatic Stay
Due to the length of a Chapter 13 bankruptcy, the Automatic Stay will last far longer. As Chapter 13 lasts 3-5 years, the automatic Stay will generally be effective throughout this period. However, if the debtor does not pay according to the Chapter 13 plan they have agreed with the court and any secured asset isn’t being paid for as approved, the creditor will likely file a motion for Relief From Stay. Once the Stay is lifted, the debtor loses their rights under this injunction and becomes subject to the risk of losing the secured asset.
At the Office of Christopher Hewitt, we understand the complexities and emotional toll of the bankruptcy and automatic stay process. Our team actively safeguards your valued assets to the fullest extent the law allows. We will work closely with you to identify what matters most in your financial landscape and strive to achieve the best possible outcome. With our expertise and guidance, you can confidently navigate the bankruptcy journey, ensuring that your priorities are front and center. Let us be your trusted partner in securing a more stable and prosperous financial future. Call now for a free consultation.