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The Automatic Stay in Chapter 13 Bankruptcy Cases

Automatic Stay Title On Legal Documents

You work hard to support your family, but every payday, you feel like all your hard work is going down the drain when you have to hand over all your money to creditors. The stress of constant collection calls, threatening letters, and fear of losing your car or home is overwhelming.

If this sounds familiar, know that filing for Chapter 13 bankruptcy can provide a powerful legal tool to stop the financial harassment. The automatic stay will protect you from creditors for a limited time, allowing you to breathe and focus on rebuilding your finances.

What Is the Automatic Stay in Bankruptcy?

When you file for Chapter 13 bankruptcy, a federal bankruptcy court judge will immediately issue an order known as an automatic stay. This order is a crucial part of the U.S. Bankruptcy Code (11 U.S.C. § 362), which acts as a legal injunction prohibiting most creditors from taking any further action against you or your assets.

Think of it as a protective legal shield that springs into place the instant you file for bankruptcy. This is one of the most immediate and significant benefits of this process, as it offers you breathing room to reorganize your finances according to your Chapter 13 plan without constant pressure from creditors.

What Collection Actions Does the Automatic Stay Stop?

The scope of the automatic stay is wide and designed to stop all collection efforts. For our clients in Augusta and throughout Georgia, this means immediate relief from:

  • Wage garnishments: The law states that garnishments must stop when someone files for Chapter 13 bankruptcy. If a garnishment is already in place, we can contact your employer to make sure it stops immediately. In many cases, we may even be able to get a refund of garnished wages shortly before you file.
  • Foreclosures: Whether you’re behind on payments and a foreclosure is scheduled or in progress, the automatic stay will halt it. This gives you the crucial time needed to catch up with the payments through your Chapter 13 plan.
  • Repossessions: If a creditor threatens to repossess your car or other property, filing a case will stop them from doing so. You can then offer a plan to pay off past-due amounts or restructure the loan.
  • Lawsuits, Evictions, and Harassing Calls: The stay stops pending lawsuits for collecting a debt, halts certain eviction proceedings (if specific criteria are met), and ends the endless stream of collection calls and letters. Instead, creditors must communicate through your bankruptcy attorney.

How Long Does the Automatic Stay Last in Chapter 13?

In a typical Chapter 13 bankruptcy case, the automatic stay is in effect for the duration of your three- to five-year repayment plan. This long-term protection allows you to successfully complete the plan, have your suspended driver’s license reinstated, and eventually achieve a financial fresh start.

However, it is important to note that a creditor may file a motion with the bankruptcy court requesting “relief from the automatic stay”. This is common for secured creditors, such as a mortgage company, if the borrower fails to make ongoing payments after filing for bankruptcy or fails to provide adequate insurance for collateral. Experienced attorneys at Duncan Bankruptcy Law will vigorously defend against such requests in order to maintain the protection of the borrower.

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The Limits of the Automatic Stay

While the automatic stay can be powerful, it is not absolute. There are certain exceptions outlined in the Bankruptcy Code, including:

  • Actions to collect child support or alimony
  • Certain criminal proceedings
  • Tax audits and notifications of tax deficiency

Additionally, if you recently had a previous bankruptcy case dismissed, the protection of the automatic stay may be limited or last only 30 days, unless you can convince the court to extend it.

Let Our Attorneys Activate Your Financial Shield

Navigating the complexities of bankruptcy law can be challenging, but with expert guidance, it can be done successfully. At Duncan Bankruptcy Law, we have extensive experience filing over 10,000 cases and understand how to leverage the automatic stay for our clients’ maximum benefit. From the moment we file a case, we are committed to preventing garnishments and foreclosures and providing our clients with the peace of mind they deserve.
Contact Duncan Bankruptcy Law for a free consultation. We will review your financial situation and explain all your options. Our experienced team will help you decide if Chapter 13 bankruptcy is the right choice for you.