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Bankruptcy’s Automatic Stay Provision


By the time you’ve decided to file for bankruptcy, you’re probably facing a great deal of debt. Your bank may be threatening foreclosure on a past-due mortgage, and other creditors may be threatening to sue to get the money they’re owed on a consumer debt. As soon as you file for bankruptcy, a stay enters into effect that will prevent certain types of irreversible damage caused by unpaid debt. Learn more below about the automatic stay.

How the automatic stay works

As is implied by the name, a stay that prevents your creditors from attempting to collect the debts you owe automatically goes into effect when you file your bankruptcy petition. The stay prevents creditors and collection agencies from directly contacting you about the debts you owe, filing or continuing to pursue lawsuits against you, filing liens against your property based on prior court judgments, garnishing your wages, repossessing property, or otherwise trying to get you to pay them. The stay only lasts while your bankruptcy case is before the court; after the stay is lifted, creditors may make an attempt to repossess any property you kept for which payment remains past-due, or enforce other debts that were not eliminated in bankruptcy.

When doesn’t the stay apply?

There are certain forms of debt and debt collection to which the stay will not apply. For example, lawsuits filed to collect overdue alimony or child support, or other actions to collect these sorts of debts, will not be stayed. Also, bankruptcy’s automatic stay won’t apply to governmental tax audits or assessments for overdue taxes. An attorney can help you understand which collections and court actions will or will not be put on hold by virtue of the automatic stay. It is important to keep in mind that the automatic stay applies only to debts created prior to you filing for bankruptcy. The stay will not apply to debts in your name that came to exist while your bankruptcy case was ongoing or after your case was closed.

Time is of the essence

Certain benefits offered by a stay may be lost, should you delay your bankruptcy filing. Should you wait too long to file, your creditors may have enough time to obtain judgments against you and to perfect those judgments by obtaining liens against your property. Once a lien has been filed against your property, that debt becomes secured and is not eliminated through bankruptcy in the same manner as, for example, unsecured credit card debt. Speak with an attorney as soon as possible if you are considering bankruptcy, to ensure that you act before important deadlines pass you by.

If you are facing a large amount of consumer debt, or believe you may soon be subject to foreclosure in Maryland, contact a compassionate and dedicated Germantown bankruptcy attorney at Haeger Law for a consultation, at 888-463-3520.