Automatic Stay During Bankruptcy

Bankruptcy - Automatic Stay

Hawaii Bankruptcy Attorneys Understand Your Rights Regarding Automatic Stays

Honolulu Bankruptcy Firm Knowledgeable About What Creditors Can and Can't Do

An automatic stay is an immediate injunction that stops collection efforts by creditors, collection agencies, or government entities to collect a debt from someone who has filed for bankruptcy. The stay begins at the moment the bankruptcy petition is filed, although secured creditors may ask the bankruptcy court to lift the automatic stay if they have sufficient grounds to make the request. Creditors should make every effort not to violate an automatic stay – doing so can result in a claim against them for damages.

What Does an Automatic Stay Protect the Petitioner From?

An automatic stay may shield a debtor from certain actions by a creditor, including:

  • Initiation or continuation of court proceedings against the debtor
  • Actions to obtain a debtor's property, or to create, perfect, or enforce a lien against it
  • Eviction or foreclosure
  • Being found in contempt for failure to pay child support
  • Losing access to basic resources such as utility services, welfare or unemployment benefits
  • Wage garnishments

A bankruptcy court may give a creditor relief from an automatic stay if the creditor can show that the stay does not give him adequate protection or jeopardizes his interest in certain property. This relief might be periodic cash payments or an additional or replacement lien on the property.

Once an automatic stay goes into effect, creditors are unlikely to receive the full amounts they are owed. Instead, creditors of a Chapter 7 bankruptcy filer will receive a proportional share of the debtor's limited assets if any nonexempt assets can be liquidated. Creditors of a Chapter 13 bankruptcy filer receive a proportional share of monthly payments whose amount is determined based upon the bankruptcy filer's disposable income and the value of nonexempt assets, if any.

What an Automatic Stay Will Not Stop

There are some instances when an automatic stay won't help the bankruptcy petitioner, such as:

  • IRS audits
  • Lawsuits seeking to establish paternity or to establish, modify, or collect child support or alimony
  • Criminal proceedings

If you have questions about automatic stays and how they affect your bankruptcy filing, an attorney at The Law Office of Jean Christensen LLLC can explain your rights to you. Contact us online or call 808-521-1202 to set up a free initial consultation with an experienced Honolulu bankruptcy attorney today.