How Does It Protect You? When Does It Go Into Effect? What Happens If It Is Violated?
When you’re struggling to meet your financial obligations, whether as a result of an injury or illness, the loss of a job, or a divorce, one of the most difficult challenges you’ll face is the virtual barrage of phone calls, letters, emails, text messages and other communications from creditors. You can find it difficult to go to the mailbox, and your heart can jump every time the phone rings. When you file for bankruptcy protection, you put a temporary end to that type of harassment.
The Automatic Stay in Bankruptcy
When you file for personal bankruptcy protection, an automatic stay will immediately go into effect. The stay prevents your creditors from attempting to collect a debt through any means outside of the bankruptcy proceeding. Once your creditors have received notice of the bankruptcy filing (notice is a party of the process), they must stop calling, writing or communicating in any other fashion directly with you in an effort to collect the debt. Furthermore, if they have seized property that has not been sold, they must return it.
What Happens If a Creditor Violates the Automatic Stay?
The bankruptcy laws provide for sanctions if a creditor “willfully or intentionally” engages in acts that violate the stay. Those sanctions can include costs and attorneys fees related to any proceedings resulting from the violation, as well as punitive damages, at the discretion of the court.
How Long Is the Automatic Stay in Force?
The automatic stay will remain in effect until your bankruptcy is closed. That will include the entire 3-to-5-year period of a Chapter 13 reorganization. A creditor may, however, petition the court to have the stay removed. As a general rule, the court will only grant such a request if you have engaged in bankruptcy fraud or there is concern that collateral may be destroyed or damaged.
Contact Attorney Howard N. Sobel
At the office of Howard N. Sobel, we provide personal bankruptcy counsel to men and women throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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