When you tell your dog to “stay”, a well-trained dog will immediately stop moving. Imagine that you are the bankruptcy court and that your creditors are dogs.
The moment you file your Chapter 7 or Chapter 13 bankruptcy, the automatic stay goes into effect. Any moneylender is prohibited from moving forward with any collection activity, including phone calls, letters, pending foreclosure, or pending repossession.
The moneylenders receive notice of the automatic stay from the bankruptcy court; however, sometimes the attorney will give immediate notice to a moneylender.
Relief from the Automatic Stay
Sometimes a moneylender will ask the court for permission to resume collection activities by asking for relief from the automatic stay. Most commonly the moneylender will file a motion for relief from stay under Section 362. There are also some exceptions to the automatic stay, including certain eviction proceedings and certain setoff actions.
How will the automatic stay affect you, your family, and your property? Call Henley and Henley for your free bankruptcy consultation, and you will find answers to all of your questions.