The most obvious and immediate benefit of filing for bankruptcy protection under Chapter 7 or Chapter 13 is the automatic stay of Bankruptcy Code Section 362. The automatic stay goes into effect immediately upon the filing of the bankruptcy petition, and prevents most creditors from doing anything to collect or enforce a prepetition claim against the debtor. For further information about the automatic stay of bankruptcy and how it can relieve debt collection pressure, contact a San Antonio bankruptcy attorney at Rosenbaum Law Offices (now Davis Law Firm).
Debt collection measures that are covered and stopped by the automatic stay include telephone calls, collection letters, the filing or continuation of lawsuits, garnishment, repossession, and foreclosure. There are specific exceptions to the coverage of the automatic stay, but very few of them are likely to arise in a consumer bankruptcy case. The few exceptions that do sometimes affect individual debtors have mainly to do with criminal prosecution, paternity or child support proceedings, alimony cases, and the assessment or notice of tax liability.
A creditor is said to violate the automatic stay if they know the bankruptcy has been filed and they make efforts to collect a debt, repossess collateral without Bankruptcy Court permission, or proceed with a lawsuit against the debtor, just to name a few examples. Any debtor who believes that a creditor is violating the automatic stay should contact his or her lawyer immediately.
While most violations of the automatic stay in recent years are accidental and easily corrected with a single phone call, there are times when a creditor’s persistent violation of the automatic stay can cause serious problems for the debtor, and the Bankruptcy Court will normally award damages and attorney’s fees upon proof of the violation in such cases.
A creditor can ask the Bankruptcy Court for permission to resume collection or foreclosure efforts against a debtor by filing a motion for relief from the automatic stay. In many cases the debtor can agree to relief from the stay, but our San Antonio bankruptcy lawyers review such motions carefully. Where the motion seeks permission to foreclose a mortgage, terminate a residential lease, or repossess a motor vehicle, we can oppose it in court. When our experience tells us that the creditor is likely to seek relief from the automatic stay, we can very often resolve the situation on terms favorable to our client through negotiation.