If you are considering filing for bankruptcy in San Diego or elsewhere in Southern California, you have a powerful legal tool at your disposal called an "automatic stay." An automatic stay stops your creditors from taking actions against you that might otherwise have a severe negative financial impact on your future. And the sooner you file for bankruptcy, the sooner this automatic stay will go into effect.
At San Diego Bankruptcy Attorney, we have a deep understanding of and extensive practical experience with automatic stays associated with California bankruptcies. We know exactly what a stay will and will not accomplish for you. We know how a stay will affect things later in the bankruptcy process and how filing for Chapter 13 or Chapter 11 bankruptcy relates to your automatic stay.
Contact us anytime 24/7 by calling 619-488-6168, and we can give you a free, no-obligation bankruptcy consultation and help you find your best path forward to a fresh financial start.
What Can an Automatic Stay Do?
Regardless of which chapter of bankruptcy you file, an automatic stay will immediately go into effect, in accordance with federal law. There are a few differences, however, based on whether it's Chapter 11 or 13 - for example, Chapter 13 stays also protect co-debtors on consumer loans.
There is no need for the creditor to first receive notice of the fact you've filed for bankruptcy in order for the stay to go into effect. It goes into effect immediately, and "automatically," even without the lender's knowledge or consent.
The automatic stay gives the borrower "breathing room" while the bankruptcy process is being hashed out; and it not only protects you - it also protects more "courteous" creditors from being elbowed out by more aggressive ones. So the law has both creditor and borrower in mind on this matter.
But what does an automatic stay specifically stop creditors from doing? Here are a few representative answers to that question:
- Continuation of collection calls and all collection attempts wherein you would be contacted by the lender.
- Repossession of property to satisfy the debt - including automobiles, real estate, and expensive jewelry or personal items.
- The filing or pursuance of a lawsuit against you for the collection of any debt.
- The imposition of wage garnishment or bank levies for the balance of the debt.
- Under Chapter 7, a stay stops a foreclosure; although, that might still be the ultimate result after all debts are discharged.
- Immediate eviction from your home or apartment.
- Cutting off of utility services, like power, water, or natural gas.
However, an automatic stay cannot protect you from everything. Here are some things that a stay will not affect:
- The filing of criminal charges against you or the proceeding of a criminal case against you - even if the crime involved is financial in nature and somehow related to your bankruptcy filing.
- The imposition of a spousal support or child support order. While being bankrupt might ultimately affect how much you have to pay, at least in the near term, for such things - the automatic stay itself has nothing to do with these matters.
- A tax audit, tax assessment, or a notice of a tax return being due. However, tax collection is indeed stayed just like all other actual collection, by the automatic stay.
Evictions and Automatic Stays
An automatic stay based on a bankruptcy filing may delay eviction from a home or rented apartment, but it will not work the same way in all cases.
Your landlord can get a "judgment of possession of the property" that will affect the outcome. If your landlord fails to get such a judgment before you file bankruptcy, then the stay will bar him or her from issuing you a termination notice or taking any action to begin or continue an eviction.
But if you file bankruptcy only after the landlord has gotten the judgment, then the automatic stay applies for 30 days - IF, you go through the proper procedures. This means you have to file a deposit on the back rent with a local court, file form 101 A, and serve a copy of the form to your landlord.
If you don't pay the full amount owed by the time 30 days are up, however, you can be immediately evicted.
Who Can Benefit From an Automatic Stay?
Not everyone can file for bankruptcy and get an automatic stay. Most can, but there are a few exceptions to be aware of based on having filed bankruptcy in the past.
The rules for automatic stays in cases of repeat bankruptcy filers are quite complex. But, basically, if you have filed bankruptcy before, there are limitations on the stay OR it won't take effect at all.
One past bankruptcy within a year of filing a new one can limit the stay to 30 days only.
Two or more past bankruptcies within a year of filing bankruptcy again eliminate the stay altogether.
However, you can file a motion to impose a stay or to extend it beyond 30 days and get the court to approve it if you can meet the burden of proof that your new bankruptcy filing is "in good faith."
How Long Does an Automatic Stay Remain in Effect?
The length of time during which an automatic stay remains in effect can vary. If you file Chapter 13, then it's in effect for the full duration of the Chapter 13 payment plan, which can be from 3 to 5 years.
Under Chapter 11, the stay will end when any of the following things occur:
- The creditor or creditors successfully file to get the stay waived by a court.
- The bankruptcy case is closed, regardless of whether it was successful or not.
- The property in question is no longer owned by the estate of the party filing bankruptcy.
- The debtor has discharged all of his or her debt. At this point, the stay is replaced by a permanent court injunction prohibiting collection attempts on the discharged debt.
Also, as we have seen in the section just above, stays of repeat filers may end after only 30 days in some cases.
What If Creditors Violate the Automatic Stay?
If creditors could violate automatic stays with impunity, then they wouldn't be worth anything at all. But in fact, there are potential legal consequences for those who do so.
If a lender can be shown to have "willfully violated" the automatic stay, they become liable for any damages you suffer as a result. These damages include any legal fees you incur in the process of forcing the creditor to comply with the stay.
In extreme instances, a creditor violating an automatic stay could even be liable for punitive damages as well as actual damages.
Realize that it can take anywhere from a few days to a few weeks for the court to give notice of the bankruptcy filing to your creditors. That's why your bankruptcy lawyer will contact your creditors by phone to prevent a potential action by a creditor who is unaware of the automatic stay.
If creditors take actions against you without realizing you've filed for bankruptcy, that's obviously a lot different than "willfully" violating the stay. But nonetheless, they must "undo" all such actions once they have knowledge of your bankruptcy filing, for all such actions would be void if the stay prohibited them.
Creditors Can File For "Relief" From an Automatic Stay
Although your stay goes into effect automatically once you file for bankruptcy, you also need to be aware that creditors may have the option of filing for "relief' from the stay, which relief if granted, would lift the stay.
If a creditor has already file suit against you or is already in process of an action the automatic stay prevents, then that creditor must cease the action or face being fined. But a court order lifting the stay could allow the action to take place or to continue.
To being the process of filing for relief from the stay, the creditor must obtain the most appropriate form to file the correct motion with the court, based on what the creditor is asking the court to do specifically. A hearing date would then be set.
One form is used for lifting stays over real estate, another for stays against personal property, and still another for lifting a stay against proceeding with a lawsuit. So the correct form must be filed and the reason why the creditor thinks the stay should be lifted, along with acceptable evidence, must also be filed with the court.
There is also a filing fee that the creditor must pay to file the motion for lifting the automatic stay.
And the motion must be served to all parties involved that the law requires to be notified.
Now, you really shouldn't let the fact that a creditor can file to get the stay lifted keep you from filing for bankruptcy. First of all, the motion to lift the stay could very well be denied. Second, it might only be certain creditors or certain aspects of the stay that are lifted. And finally, it will at least buy you extra time, even if the stay is ultimately lifted.
Why Choose San Diego Bankruptcy Attorney?
When you are hopelessly buried in debt and creditors are hounding you on a daily basis, you need an experienced local bankruptcy expert to guide you through the process of deciding how best to recover your financial future.
If evictions, utility shut offs, or repossession of your only vehicle or of other property is looming, you don't have time to waste with inexperienced bankruptcy lawyers or those who fail to give your case the speedy, personalized attention it requires.
We at San Diego Bankruptcy Attorney always put our client's best interests first. We put ourselves in your shoes and fight for your financial future just like we were fighting for our own.
We have a long track record of preventing harsh creditor actions by quickly filing for bankruptcy for our clients and getting an automatic stay injunction in force as rapidly as possible. We also have stopped such creditor actions mid-stream and averted them that way, though already begun before the stay was in force.
The bottom line is you need a California bankruptcy attorney fighting in your corner who will gain you every legal advantage possible and ultimately win you the best possible outcome to your bankruptcy case.
That's what we at San Diego Bankruptcy Attorney do for our clients each and every day.
Also, we don't hit you with hidden fees but charge only upfront, reasonable fees for our services, while also allowing you a workable payment plan (which in your financial situation we fully understand you might need to avail yourself of.)
And we treat you with respect, communicate with you, and explain to you your options to empower you to make informed decisions you won't regret, every step of the way through the bankruptcy process.
Contact Us Today For Immediate Help!
At San Diego Bankruptcy Attorney, we know how to quickly file bankruptcy for you in order to put the automatic stay into effect and spare you the loss of property by repossession, eviction or foreclosure, continuation of collection calls, the filing of lawsuits, and other actions prohibited by the stay.
We can file a regular Chapter 11 bankruptcy or Chapter 13 bankruptcy for you or make an "emergency filing" that can get it done even faster in situations where you can't complete the ordinary paperwork before creditors take drastic actions against you.
We know the powers and limitations of the automatic stay and how to use it to give you the breathing room you need to get your financial house in order. We can help you with every step of the bankruptcy process, from initial filing to selection or exemptions to final discharge.
Or, you can meet with us in person by visiting our office located at 750 B Street, Suite 2515, in San Diego, CA.