When a debtor files a bankruptcy petition, an automatic stay is issued. The automatic stay stops all collection efforts, but it does not discharge debt. The stay keeps creditors from sending collection notices, garnishing wages, foreclosing on homes and repossessing property, and it remains in effect until the bankruptcy case is over. Below, you will get some additional bankruptcy information in Laguna.
Exceptions to the Automatic Stay
Not every legal action is subject to the terms of an automatic stay. Common exceptions are:
- Criminal cases
- Modification, establishment and collection of child support and spousal support
- Paternity establishment
- Government audits
- Loan cosigners
If your case falls within the automatic stay’s exceptions, you and your bankruptcy attorney in Laguna can ask the court to impose a stay to stop a pending home foreclosure. To be successful, you must have convincing evidence that proves that you are acting in good faith and that you aren’t filing multiple bankruptcies.
Penalties if Creditors Attempt to Collect During the Stay
If creditors try to collect money after a stay is issued, they may be held in contempt of court. In this action, the creditor will be legally forced to stop all collection attempts, and they may face heavy fines and substantial damages.
Chapter 7 & 13
When you petition for Chapter 7 bankruptcy protection, your assets are part of a bankruptcy estate, and a trustee liquidates them to pay as many of your creditors as possible. With the automatic stay, your trustee will have time to sell assets that would otherwise be foreclosed or repossessed.
If you file for Chapter 13, a stay can give you time to regroup and head off a potential foreclosure. During a Chapter 13 case, you, your Bankruptcy Attorney in Laguna and the court put together a repayment plan that allows secured debts to be repaid over a period of up to five years.
Hiring an Attorney
Bankruptcy is a complex process, and California’s laws are unique. An attorney with the firm of Winterbotham Parham Teeple can help you through the process and make sure that your paperwork is submitted properly. Click here for more information.
