Filing a bankruptcy petition can offer numerous benefits for those experiencing financial difficulty. In the long term, the obvious benefit and main motivation for many in filing for bankruptcy is to obtain debt relief and get total debt under control. In the short term, soon after filing a petition for bankruptcy with the court, an automatic stay goes into effect, offering petitioners with relatively immediate relief from creditors and collection agencies.
An automatic stay operates as an order from the court which prevents creditors from collecting debts from a petitioner who has filed for bankruptcy. This protection goes into effect immediately after the bankruptcy petition is filed. Section 362 of the United States Bankruptcy Code lays out the rule governing automatic stays and identifies some exceptions to the protection. The automatic stay operates to protect debtors from certain actions by creditors, which include:
· Starting or following legal proceedings against the indebted individual that was filed before the bankruptcy case began
· Enforcing a judgment gained prior to the start of the bankruptcy proceeding
· Attempting to gain ownership of or possess control over the debtor’s property
· Creating or enforcing any lien against the debtor’s property, or creating or enforcing any lien against the debtor’s property involving a claim that arose before the commencement of the bankruptcy proceeding
· Collecting or recovering a claim against a debtor that started prior to the start of the proceeding
· Collecting the setoff of any debt owing to a debtor that arose before the bankruptcy petition was filed
· Commencing or continuing a proceeding before the U.S. Tax Court for tax liability owed by the debtor for a taxable period that had ended before the date of the order for relief under the bankruptcy proceeding
It is also important to note that in addition to the exceptions laid out by the rule itself, secured creditors may ask the court to exclude them from the automatic stay if they can show good cause. In that case, the creditor must show that the automatic stay fails to give the creditor adequate protection or that it puts the creditor’s interest in the property in question at risk.
An experienced bankruptcy attorney can expand on the protections offered by the automatic stay and can also explain some of the exceptions to the protection.
Are You Considering Bankruptcy?
If you are facing overwhelming debt, filing for bankruptcy could be the right choice for your situation. Bankruptcy is not a dire as many people think; instead, it is usually just the key to offer families and individuals the fresh start they need.
If you are considering filing for bankruptcy, you should contact a qualified attorney, like a bankruptcy attorney in Las Vegas, NV from Ball Bankruptcy – Ballstaedt Law, who can discuss your particular case with you.