Instant Relief - Chapter 7

The moment you file for bankruptcy, an automatic stay goes into effect. This Automatic Stay freezes collection attempts and the process of repossession in nearly every circumstance. This means there will be no more collection calls, no more demand letters, and you will be able to prevent your creditors from repossessing your car or foreclosing on your mortgage. Creditors have to petition the court in order to resume collection activities, and in most instances, the court does not grant these requests. Even if you owe money to the IRS, they will not be able to continue with their collection activities while the automatic stay is in place.

For many, this is one of the best benefits of filing for Chapter 7 bankruptcy - the sense of relief and peace of mind that comes with knowing there will be no more harassing calls at work or at home, and that creditors cannot repossess secured property or foreclose on the home is priceless. However, the automatic stay does not cover any additional debt that accrues after the bankruptcy has been filed, so if you miss a car payment, rent payment, or mortgage payment after you file for bankruptcy, collection activities can and often will resume.

Unfortunately, the automatic stay does not apply to everyone. If you fall under any of the following categories, you won't receive the full protections that Chapter 7 bankruptcy can provide:

1.        Had a bankruptcy case dismissed in the past year - your automatic stay does not start automatically. Either you or your lawyer must petition the court in order to receive protection, and it only lasts for 30 days. If you want protection for longer than 30 days, you will have to petition the court to extend your protection.

2.        Had 2 or more bankruptcy cases dismissed in the past year - you are not entitled to an automatic stay. You or your lawyer would have to petition the court successfully in order to be granted an automatic stay. Unless your circumstances are very unusual, it is unlikely that you will receive an automatic stay. It may even be difficult for you to obtain a successful bankruptcy discharge, depending upon the circumstances.

3.        Your debts are the result of criminal activity. Bankruptcy's automatic stay does not apply to debts incurred as a result of criminal activity or willful tax evasion.