When you are in debt, the constant phone calls, letters, and lawsuits from creditors can become overwhelming. Unfortunately, there is not much you can do to stop this from occurring. However, in the event you decide to file for bankruptcy, you will be granted an automatic stay, which effectively halts most collection efforts against you. It’s important to understand, however, that a creditor may petition the court to lift the automatic stay so they may continue their pursuit of assets. If you’re getting ready to file, understand when the court will lift the stay and the importance of working with a Memphis, TN consumer bankruptcy lawyer, you’ll want to keep reading. The following blog covers some of the most important details surrounding these matters.
What Is the Automatic Stay?
When you file for bankruptcy, the court will issue an order known as an automatic stay. Essentially, this requires creditors to stop collection efforts against you. Once your bankruptcy process is complete, or if your case is dismissed for any reason, the stay expires, and creditors may pursue the funds they are owed.
Once the automatic stay is put in place, all collection efforts against you, including lawsuits, wage garnishments, foreclosures, and even letters in the mail regarding an owed debt, must stop. If a creditor or collector intentionally violates the stay, they can
It’s important to understand that some creditors are exempt from this action. For example, lawsuits over unrelated matters, like personal injuries or divorces, may continue. Similarly, collection efforts on missed child support or alimony payments may be halted during this process, but you are still obligated to continue making payments per the court order from your divorce or custody case. Additionally, matters like tax audits will continue during your bankruptcy process.
Under What Circumstances Will the Court Lift an Automatic Stay?
It’s important to understand that, in some instances, a creditor may request that the court lift the automatic stay so they may continue collection efforts against you. There are several factors the court will consider before lifting the stay. Generally, this motion is filed because the creditor has reason to believe the filer is abusing the bankruptcy process to avoid paying the debts they owe, is going to destroy or damage collateral, or because the stay would negatively impact the best interests of the creditor.
If a creditor wishes to lift the automatic stay protections you have, they must file a written motion through the court that includes additional evidence. You will be able to respond to the motion, and if you disagree, the court will schedule a hearing to determine if the lift should be granted. If the court denies the motion, the creditor will be unable to pursue collection efforts. However, if new information arises during your bankruptcy process, they may file another motion.
When you’re going through bankruptcy, ensuring you have someone well-versed in this process to help you navigate the complexities and fight for your best interest is critical. At the Arnold Law Firm, our dedicated team understands how overwhelming bankruptcy can be. That is why we are committed to guiding you through every step of this process, from the moment you decide to file to the minute your case is closed. When you’re ready to obtain debt relief, contact our team to get started.
