Can Creditors Attempt to Lift an Automatic Stay?

An automatic stay is one of the most helpful tools when filing for bankruptcy. Under U.S. bankruptcy law, creditors and debt collectors are not permitted to contact debtors, as well as pursue any further legal action during the bankruptcy process. While filing for bankruptcy can keep your creditors at bay, there are some situations in which a creditor may seek to lift an automatic stay. Here’s what you’ll need to know to protect yourself.

Secured Credit Accounts

If you’ve filed for Chapter 7 bankruptcy and you are behind on your mortgage or your car payment, your lender may file a motion to lift an automatic stay to either continue or start foreclosure proceedings. If there is no equity cushion (not enough equity to cover the loan), then your creditor may opt to file a motion to lift the automatic stay. While this information may sound alarming, a bankruptcy attorney can help guide you in the right direction on what to do.

Unsecured Credit Accounts

If you are filing for Chapter 7 bankruptcy, unsecured creditors won’t file a motion to lift an automatic stay unless the unsecured debt will not be discharged through bankruptcy. In the case of Chapter 13 bankruptcy, most debts that are not discharged are typically included in a debt reorganization plan so there would be no need for creditors to file a motion to lift the automatic stay.

Why You Need a Bankruptcy Attorney

Bankruptcy law is complicated and without experience or knowledge of the law, you could be putting yourself at a disadvantage. Knowing that your creditors are going to lift an automatic stay during your bankruptcy proceeding can be scary and not knowing what to do can make it that much more stressful. A bankruptcy attorney fully understands the law and knows what creditors can and cannot do. Keep yourself protected from creditors and enlist the help of a bankruptcy attorney today.

If you are struggling with debt and can’t seem to make ends meet, bankruptcy may be the right option for you. Contact Wadhwani & Shanfeld today at (800) 996-9932 to explore your case and discuss the bankruptcy options that may help you.