“What is the Automatic Stay that I’ve heard about in bankruptcy?”
As the first part of this order implies, this is normal (or automatic) document that’s filed in Alabama bankruptcy court. It basically tells all of your creditors to freeze.
They don’t need to be calling you, suing you, repossessing on your, or foreclosing on you when this is filed in your bankruptcy case.
“What’s the purpose of this?”
Well, this pause is to help get a full picture of what you’re dealing with. How much you can pay, whether you qualify for a Chapter 7 bankruptcy or not, or figure out a payment plan if you’re filing a Chapter 13 bankruptcy.
The court wants these creditors to freeze because it would be unfair if one of your creditors took your money/property/car after the others sat back and waited for you to pay them.
It would be unfair to the other creditors, so the court is asking everyone to step back and let the court figure out a plan.
“How is this practical for me, the consumer?”
If you’ve properly filed for bankruptcy (hopefully with a good bankruptcy lawyer), and a creditor still comes for you after an automatic stay has been filed, you can sue the creditor for violating the automatic stay order.
We’ve seen plenty of cases where these creditors will violate the law, and bankruptcy lawyers will come to us and ask us to litigate those cases. It’s not uncommon for these creditors to break the law.
The automatic stay, once it’s been filed, is in affect until the judge lifts it or the case is over.
However, this doesn’t mean that you will be without protection after your case is over. Usually, you’ll have a discharge order that tells the creditors not to collect on this debt again.
The automatic stay if for the duration of your foreclosure case, and the discharge is for after your foreclosure case.
They have similar effects, however they are different orders.
The bottom line is, if you have the protection of bankruptcy and someone is trying to collect on you, you need to find out if they’re violating the automatic stay, or the discharge order.
Either way, it’s highly likely that we can sue them and have damages awarded to you for their misconduct.
We hope this is helpful to you!
If you live in Alabama and you have any questions, feel free to get in touch with us.
You can reach us by phone at 1-205-879-2447, or you can fill out a contact form and we will get in touch with you quickly.
We look forward to chatting with you!
Thanks for reading, and have a great day.