What is the Automatic Stay?
The automatic stay is a court order that goes into effect immediately upon filing your bankruptcy case. The purpose of the automatic stay is to give you "breathing space" while the bankruptcy goes forward so that the bankruptcy process can handle your affairs without creditors interfering. In some cases, if a person has filed multiple cases in a short amount of time, the stay may not go into effect in their later cases, and you must ask the court to impose the stay. If a creditor wishes to continue collecting, and has an allowed basis for doing so under bankruptcy law, they will need the court to grant relief from the stay first. If not, they can be subject to court sanctions - that's where it pays to have an experienced bankruptcy attorney who is well versed in the stay and the complex litigation process.
What does the Automatic Stay protect me from?
The automatic stay is located in section 362 of the Bankruptcy Code and lists specific acts that are not allowed while it is in force:
1) the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title;
(2) the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title;
(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;
(4) any act to create, perfect, or enforce any lien against property of the estate;
(5) any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title;
(6) any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this title;
(7) the setoff of any debt owing to the debtor that arose before the commencement of the case under this title against any claim against the debtor; and
(8) the commencement or continuation of a proceeding before the United States Tax Court concerning a tax liability of a debtor that is a corporation for a taxable period the bankruptcy court may determine or concerning the tax liability of a debtor who is an individual for a taxable period ending before the date of the order for relief under this title.
11 U.S.C. § 362(a)
However, with 28 exceptions listed in the Code and numerous other nuances to stay enforcement due to various decisions of various bankruptcy courts, the Bankruptcy Appellate Panel, and 9th Circuit Court of Appeals, holding creditors accountable for violations requires an attorney who is both knowledgeable and experienced in stay enforcement.
What does it cost?
Part of the damages a creditor pays when we successfully bring a case for violation of the automatic stay to the court is the attorney's fees and costs for the work to bring the action. We charge a small up front fee upon taking the case to cover initial expenses but otherwise we get paid from the creditors upon settlement or winning in court.