Phoenix Automatic Stay Attorney
Speak to a Phoenix bankruptcy lawyer at Hilltop Law firm if you have questions about the benefits of an automatic stay.
Lawyer Protects Against Creditor Harassment in Phoenix
Facing mounting medical bills, John was overwhelmed by aggressive calls from debt collectors and the threat of losing his home due to unpaid debts. Despite his best efforts, the pressure from creditors continued to escalate, leaving him with no immediate way to stop the harassment or protect his assets. This is the very problem that the automatic stay in bankruptcy is intended to solve.
An automatic stay is available to individuals who file for bankruptcy. It can provide protection against wage garnishment, bank account garnishment, repossession, foreclosure, and other debt collection actions by creditors.
Consulting an experienced attorney from Hilltop Law Firm can provide invaluable guidance on your bankruptcy questions. With almost 10 years of legal experience and two years of banking experience, Cy Hainey delivers precise legal representation to support your financial needs.
If you are considering bankruptcy, call our Phoenix bankruptcy attorney at (602) 466-9631 to find out how an automatic stay can help you.
How Does an Automatic Stay Work?
When you file Chapter 7 or Chapter 13 bankruptcy, an automatic stay goes into place immediately. It acts as an injunction to stop creditors from enforcing liens or attempting to collect debts during bankruptcy proceedings. This can bring tremendous relief to debtors who have been subjected to persistent collection efforts bordering on harassment, such as phone calls several times a day, at home and at work, and threats of legal action.
Exceptions to an Automatic Stay
While an automatic stay halts most collection activities during bankruptcy, there are exceptions: non-dischargeable debts and previous fillings.
Non-dischargeable debts are obligations that cannot be eliminated through bankruptcy proceedings. These include child support, alimony, certain taxes, and student loans, which must continue to be paid despite filing for bankruptcy. Other non-dischargeable debts include debts for personal injury caused by driving under the influence, fines and penalties owed to government agencies, and certain luxury purchases or cash advances made shortly before filing.
The rationale behind non-dischargeable debts is to ensure that certain essential obligations and societal responsibilities, such as family support and public welfare, are not neglected due to bankruptcy, maintaining a balance between debt relief and accountability.
Previous filing is a protection that’s offered by an automatic stay. It can be limited or denied if the debtor has had multiple bankruptcy filings within a short period. Specifically, if a debtor has had one bankruptcy case dismissed within the past year, the automatic stay is limited to 30 days unless extended by the court. If there have been two or more dismissals within the past year, the automatic stay does not go into effect at all.
This provision is designed to prevent abuse of the bankruptcy system by individuals who might repeatedly file for bankruptcy to delay creditors without a genuine intention of resolving their debts.
What Protection Can an Automatic Stay Provide in Phoenix?
Once you file for bankruptcy and the automatic stay goes into effect, you have protection from the following debt collection actions:
- Foreclosure: If you miss two or more mortgage payments, the bank may begin moving toward foreclosure. An automatic stay stops foreclosure proceedings, but your mortgage lender will be able to proceed again once the stay is lifted. If you file Chapter 13, the automatic stay gives you more time to make your mortgage payments current. You may also have the option to catch up on delinquent payments through a repayment plan lasting three to five years.
- Eviction: An automatic stay can delay or stop the process of eviction from your home. It would not have any effect if your landlord had a judgment against you before you filed for bankruptcy.
- Disconnection of Utilities: If you are behind on your electric, gas, water, or telephone bills, an automatic stay can prevent your service from being disconnected for at least 20 days.
- Wage Garnishment: In some cases, a creditor can take a portion of your paycheck until a debt is paid in full. An automatic stop your wages from being garnished. However, bankruptcy will not discharge child support or alimony.
- Tax Liens: An automatic stay can temporarily stop the IRS from issuing a tax lien or seizing income or property. If you owe taxes, they may be discharged in Chapter 7, or you may pay the debt in a Chapter 13 payment plan.
- Vehicle Repossession: When you file for bankruptcy, the automatic stay will stop the lender from repossessing your vehicle. The lender may file a motion for relief from the automatic stay, asking the court to lift the stay so it can repossess your car.
What Is the Duration of Automatic Stay?
The duration of the automatic stay depends on the type of bankruptcy filed. In Chapter 7 bankruptcy, the automatic stay typically lasts until the debts are discharged, which usually occurs within three to six months from the filing date. However, the stay may end sooner if the court dismisses the case or the debtor’s assets are more quickly liquidated.
In Chapter 13 bankruptcy, the automatic stay remains in effect throughout the entire repayment plan period, which spans three to five years. This extended duration protects debtors from creditor actions while they make their court-approved payments.
Creditors can request the court to lift the automatic stay by filing a motion for relief. This motion is usually granted if the creditor shows that the stay unfairly protects them from protecting their interests. Common reasons for such a request include the debtor falling behind on mortgage or car loan payments after filing for bankruptcy or if the creditor believes the property in question is not adequately protected (e.g., insufficient insurance).
If the court grants the motion, the creditor can resume collection activities or foreclosure proceedings, thereby reducing the duration of the stay’s protection for the debtor regarding that specific debt.
Automatic Stay Violations and Legal Consequences in Phoenix
Creditors who violate the automatic stay may continue aggressive collection tactics, including persistent phone calls, sending threatening letters, initiating or continuing lawsuits, or even attempting to garnish wages or repossess property. These actions blatantly disregard the court’s protection meant to give debtors relief and a chance to reorganize their finances without harassment, often exacerbating the debtor’s stress and financial instability during the bankruptcy process.
Creditors who violate the automatic stay face significant legal consequences. Courts can impose sanctions, including fines and orders to pay damages to the debtor for emotional distress and financial losses. In severe cases, creditors might also be required to cover the debtor’s legal fees. These penalties are designed to uphold the integrity of the bankruptcy process and ensure creditors comply with the automatic stay provisions, deterring future violations.
If a creditor violates the automatic stay, immediately notify your bankruptcy attorney. Collect evidence of the violation, such as letters, call logs, and any legal documents. Your lawyer can then file a motion with the bankruptcy court to address the violation. The court may enforce penalties against the creditor and mandate corrective actions, helping to protect your rights and maintain the intended relief during your bankruptcy proceedings.
What Happens When the Automatic Stay is Lifted?
In most cases, the automatic stay remains in effect until your bankruptcy proceedings are finalized and your debts are discharged by the court. However, creditors may get around the stay by asking the court to remove or lift it. Once they get a court order lifting the automatic stay, they can move forward with foreclosure or repossession. Creditors may file motions for relief from the automatic stay in both Chapter 7 and Chapter 13 bankruptcies. This is more common with Chapter 13 because creditors in Chapter 7 cases usually simply wait until the case is closed, at which time they can proceed with foreclosure or repossession for any debts not discharged in bankruptcy if debtors fail to make the required payments.
Our Automatic Stay Attorney in Phoenix Can Help
If you are overwhelmed with debt and the collection actions of creditors, filing for bankruptcy with an automatic stay lawyer may be your best option. At Hilltop Law Firm, we can help you determine if Chapter 7 or Chapter 13 bankruptcy is the right debt relief solution for you.
With almost a decade of legal experience and two years of banking experience, head attorney Cy Hainey has the knowledge and resources to guide you through these difficult challenges. Call our firm at (602) 466-9631 and speak with an experienced Phoenix bankruptcy lawyer.
Additional Information
- The Most Common Reasons People File for Bankruptcy
- Will Filing for Bankruptcy Stop Creditors from Harassing Me?