If you are considering filing bankruptcy in D.C. or Virginia, you should be aware of a nifty feature of bankruptcy called the “Automatic Stay.” Whether you file for Chapter 7 or Chapter 13, the Automatic Stay directs your creditors to cease all collection activities immediately or face court sanction.
If your home is scheduled for foreclosure, the auction will be legally postponed while the bankruptcy is pending, typically for three to four months. In addition, the Automatic Stay stops all action by creditors to collect on debts:
- Once the Automatic Stay is in place, creditors cannot call your home, cell phone or place of work.
- Creditors may not even mail to your home.
- If the creditor has sued you, the lawsuit will be stopped pending the outcome of the bankruptcy.
- Creditors cannot collect on judgments or pursue new collection actions.
- If the creditor has garnishmed your wages, the garnishment must stop immediately.
- Creditors cannot lien against your home or levy your bank accounts.
In short, the Automatic Stay buys you some peace of mind by immediately ceasing all collection efforts and creditor harassment. If a creditor, creditor’s attorney or collection agent violates the Automatic Stay, then they run the risk of sanction by the Bankruptcy Court. Penalties for violating the Automatic Stay can include money damages and attorney’s fees.
As a bankruptcy lawyer in Washington, D.C.. I can explain to you how the Automatic Stay can help you get your creditors off your back. Give me a call at (202) 448-5136 or visit the Lee Legal website for more information.