When you file for bankruptcy, you gain protection under the “automatic stay,” which protects you from your creditors during the bankruptcy process.

The automatic stay brings all collection efforts to a screeching halt. These include:

• Phone calls
• Letters
• Lawsuits
• Wage garnishments
• Repossession
• Foreclosure

In most cases, the automatic stay remains active throughout the life of your bankruptcy case.

Exceptions to the Automatic Stay

Some exceptions to the automatic stay do exist. If you file more than once within 365 days, the automatic stay is limited to 30 days. If you’ve filed three times in one year, there will be no automatic stay.

Some creditors can also try to challenge the automatic stay. To do this, they must file a written motion with the court explaining why there is good cause to lift the stay. 

Usually, they try to do this in cases where the debt is secured and when they have reason to believe the filer will devalue the property in some way during the filing or in cases where the property has enough equity to pay the creditor after a case ends.

The automatic stay also doesn’t apply to certain types of litigation, such as eviction procedures unrelated to financial violations of the lease (i.e., eviction due to criminal activity) or personal injury lawsuits. 

What should you do if a creditor calls you after you file for bankruptcy?

The first time, you should give your bankruptcy case number to the creditor and refer them to your bankruptcy lawyer. 

While theoretically, every creditor receives notice that you have filed for bankruptcy, some creditors, particularly third-party collection agents, don’t always get the information in a timely fashion.

If the same creditor calls you a second time, you should inform your bankruptcy lawyer right away. They are violating the automatic stay, and the court can issue sanctions against them. 

Get Help Today

The automatic stay can help you save your house and your car in many Chapter 13 cases and can help you gain peace of mind in a Chapter 7 case wherein you don’t have many or any assets for the trustee to sell. It can also help you protect your paycheck if you suspect a creditor is close to filing a lawsuit. 

If you are drowning in debt and want help navigating the bankruptcy process, call Haysom Law for a free consultation today. We can help you protect yourself throughout the process.

See also:

Can Bankruptcy Stop or Remove a Lien on Your New York Home?

What Happens if My New York Bankruptcy Case is Dismissed?

Which Creditors Can Sue in New York?