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Have you fallen victim to uncontrollable debt? Consider the following:
If you answered yes to any of these questions, you’ve likely considered filing for bankruptcy, and it’s likely why you’re reading this webpage. If you are considering filing for either Chapter 7 or Chapter 13 bankruptcy in Colorado or the surrounding area, you’ll want to become familiar with the term “automatic stay.”
For those doing research on whether personal bankruptcy is the right option for them, our Aurora bankruptcy attorneys have designed this website to introduce you to what our clients call one of the most beneficial aspects of bankruptcy– the automatic stay.
Once you have finished our overview, we encourage you to contact our firm for a no-cost, no-obligation case consultation. During your case evaluation, our team of experienced Aurora area debt relief lawyers can answer any Chapter 7 or Chapter 13 bankruptcy questions you may have, as well as help you figure out which debt relief option is the best for your case.
The bankruptcy automatic stay is one of the most fundamental protections provided to a debtor in Chapter 7 or Chapter 13 bankruptcy cases. The automatic stay is an injunction issued by the federal bankruptcy court that prohibits creditors from taking any further action to collect a debt or further pursue a claim against the debtor or any of the debtor’s property.
Some specific examples of how the automatic stay can help Aurora debt relief seekers include
Halts the Foreclosure Process- While it is true your mortgage holder will probably be allowed to proceed with the foreclosure eventually, an automatic stay could buy you some time by temporarily halting the foreclosure proceedings. If you want to keep your home, you are probably better off filing a Chapter 13 Florida bankruptcy than a Chapter 7 bankruptcy. For more information on halting a foreclosure, please contact one of our experienced CO bankruptcy attorneys.
Allow You to Keep Your Utilities Connected- Even if you are in arrears on the monthly bills, the automatic stay can help prevent disconnection of your water, gas, telephone, or electric service for a minimum of 20 days. However you will have to make some attempt to assure the utility company that you can pay future bills, otherwise, your utilities will eventually be shut off.
Halt wage garnishments- If you have been having your wages garnished to satisfy a court judgment, then filing for bankruptcy immediately halts these garnishments. Some people may have more than one garnishment on their monthly wages, finding out that working all month long does not leave them enough left over to pay the bills. Under Colorado state law, no more than 25 percent of a person’s salary can be taken to satisfy court judgments.
Stops Harassment from Predatory Lenders- Constant harassment from creditors can be exasperating, tedious, and even embarrassing, especially if your creditors have stooped to contacting your family or even your employer in an attempt to collect a debt. An automatic stay bars all collection actions against you. That includes any and all types of creditor harassment.
Halts Repossession- Many Aurora residents consider their vehicle one of their most valued possessions. It gets you to work or school, to see family, or just to enjoy the freedom of the road. Losing a vehicle due to repossession can have dire consequences. If you are behind on payments or a lender is threatening repossession of your car, the automatic stay immediately stops all debt collection actions, including the repossession of vehicles.
We should point out that just because filing for Chapter 7 or Chapter 13 bankruptcy offers immediate protection from collection efforts does not mean you get to keep all your stuff and pay nothing. It’s important you remember to continue to make payments on any secured property you are financing during your bankruptcy. Typically, your secured lenders expect that you will continue paying your mortgage or car loan, or that you will surrender the property.
The automatic stay is broad but is not all-inclusive. If you’re considering filing for either Chapter 7 or Chapter 13 bankruptcy in Aurora, there are exceptions to what an automatic stay can cover, including:
Criminal Prosecution- If there’s a criminal action pending against you – anything from an indictment through trial and sentencing, the automatic stay won’t apply.
Retirement Plan Loans- Retirement loans, such as borrowing from your 401(k) are generally not treated as a “debt” you owe when you file for bankruptcy since you borrowed that money from yourself. If you fail to pay this debt through a 401K loan repayment then you will have to incur the penalties involved in the early withdrawal of money from your retirement.
Child Support or Alimony- If your paycheck is being garnished for past due child or spousal support, filing for bankruptcy won’t affect those types of garnishments.
Divorce – If you’re going through a divorce while filing for bankruptcy in Aurora, you should know that the stay does not stop a paternity action or any lawsuits involving domestic support obligations, child custody, visitation, or other aspects of a divorce case.
Tax Administration- An automatic stay will not protect you from an IRS audit, and cannot stop the IRS from issuing a tax assessment, demanding your tax return, or demanding payment once a tax assessment has been issued.
Creditors who violate the automatic stay can be sanctioned by the court, so if you are continuing to get harassed by creditors or if your wages are being garnished after you’ve filed for bankruptcy, it’s imperative that you let your Aurora bankruptcy attorney know. There are serious consequences for creditors who violate the automatic stay.
If your creditor is found guilty by the court of violating an automatic stay, damages can include actual money damages, court costs, and attorneys fees. In serious violations, the court can impose punitive damages in addition to the actual damages, to punish the creditor for bad behavior.
The automatic stay is one of the most beneficial features of bankruptcy. The protection it provides can relieve bankruptcy petitioners in Aurora of countless headaches, including creditor harassment, wage garnishment, and foreclosure.
The immediate effects of the automatic stay may be just what you need to review your financial situation and decide your next steps, however, the automatic stay is not intended to be a permanent fix.
When you work with our experienced Aurora debt relief lawyers, our team of legal professionals will take swift action to stop creditors and help you restructure your finances. Even if you are facing immediate actions like foreclosure, repossession, or wage garnishment, our Colorado bankruptcy attorneys can take immediate steps to stop the action and protect the assets that matter to you most. Contact us today for a free case consultation.