Bankruptcy

3 Things That You Must Know About Bankruptcy Stay

Bankruptcy stay is one of the biggest benefits that you get when you file a petition to get bankrupt. As soon as your case is filed, the laws impose an automatic stay on all your creditors, restricting them from contacting you and forcing you to make the repayments of the debts that you owe to them. If you still get collection calls, you have the legal right to file a lawsuit against the debt collectors accusing them of harassing you while you have already filed for bankruptcy. The stay thus provides you temporary protection, at least until the final judgment comes in. The provisions regarding this are applicable in every case, irrespective of which chapter you are filing your petition under.

Limitations

When it comes to implementing bankruptcy stay, there are certain limitations that you need to be well aware of. It will not protect you from every financial or legal hassle that you are currently dealing with. For example, if there are family court proceedings, tax audits, and criminal cases running against you, you will still have to deal with the same. The stay will not stop all these actions. In most cases, it will only provide you protection against those debts that are dischargeable under bankruptcy. You may still get collection calls for the repayment of student loans because these loans are not discharged even when you go bankrupt.

Which Types Of Creditors Can Seek Relief From This Legal Stay?

Those who are co-owners of your properties, those who have tort claims against you, and those lenders who provide you secured loans may request the court for a relief from bankruptcy stay. The laws have been designed in a way that offers benefits and security not only to the debtors but also to the creditors. But, none of them can go against the stay once it is imposed. It is only up to the court to decide if they should get some relief or not. Even a single creditor may file a motion in this regard. The relief can be provided in various forms, such as conditioning, termination, and modification. If the stay is terminated, it means there are no restrictions on creditors who qualify for it. They can go ahead with their legal actions and force the debtor for the repayment of their debts. They can even sue the debtor if that seems to be a suitable option. Conditioning on the other hand refers to a situation where the creditor must first get approval from the trustee before taking any action.

The main objective behind having the provision of automatic bankruptcy stay and then the option to provide relief to specific creditors is to make sure everyone gets the justice – both the creditors as well as the debtors.


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Posted in Bankruptcy, Bankruptcy Laws | 1 Comment »

One Response to “3 Things That You Must Know About Bankruptcy Stay”

  1. Sonkar says:

    Wonderful and relevant information! I was not at all aware of all these facts. Normally people think going bankrupt is just declaring or giving a statement that you are unable to pay the debts. But it is good to note that there are legal formalities to it… need to file a petition for it. An automatic stay to protect from all the creditors by restricting them from contacting you but at the same time forcing us to make the repayments of the debts that we owe to them. If we still get collection calls, we can file a lawsuit as a legal right against the debt collectors. We can accuse them of harassing while we have already filed for bankruptcy. Though it is the temporary protection … at least until the final judgment comes in.

    Both the creditors as well as the debtors are taken care of by the provision of bankruptcy. It is to make sure that justice is for everyone – whether he is the creditor or the debtors.

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