Overcoming Personal and Legal Challenges

Overcoming Personal and Legal Challenges

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Bankruptcy’s automatic stay

An automatic stay in bankruptcy is a law that temporarily halts creditors, government entities and debt collectors from pursuing debtors. In Alabama, the automatic stay is effective once the debtor files for bankruptcy. Moreover, this law is applicable to both businesses and individuals. However, the automatic stay doesn’t apply to guarantors, corporate affiliates and officers. Here’s all about the automatic stay granted in bankruptcy.

Automatic stay protection during bankruptcy

Although the automatic stay protects debtors from collection efforts of the debt collectors and creditors, it only lasts until a court dismisses the bankruptcy proceedings. When a court denies the bankruptcy discharge, the debt returns to its status before the bankruptcy filing.

Temporary protection of automatic stay

In some situations, the bankruptcy’s automatic stay is only valid for a short period. If you owe secure creditors and are behind in your payments, the creditors may raise a motion to lift the automatic stay. Once the court lifts the stay, the creditor may repossess your property. However, you can agree with the creditor to gradually pay the debt instead.

Additionally, if you’ve filed for bankruptcy twice, the automatic stay doesn’t attach. In such a scenario, you can request the court to extend the stay by filing a motion.

After filing a bankruptcy petition, you need to file a Statement of Intention. It’s a document that illustrates to the court the property you want to keep and the assets you’ll surrender to creditors. Failure to file this document dissolves the automatic stay. Bankruptcy’s automatic stay doesn’t cover:

  • Divorce
  • Paternity suits
  • Child and spousal support
  • Eviction
  • Child custody

When filing for bankruptcy, it may be beneficial to consult an attorney. An attorney may help you successfully file for an automatic stay to prevent creditor harassment during the bankruptcy proceedings.