The automatic stay in bankruptcy is the notice that puts creditors on notice that they cannot take certain actions against you in terms of collecting the debt. The automatic stay is created immediately upon filing of the bankruptcy case whether or not official notice has been received by that creditor or not. The automatic stay is exactly what you are the bankruptcy case. It is the protection that tells creditors you have to stop calling, to stop trying to collect the debt, to stop most court appearances and you must obey the bankruptcy rules and filed the bankruptcy process with regard to this individual debtor.
When someone files in my office, we obtain a case number. The case number is then put on a document entitled automatic stay which advises the creditors that they cannot take certain actions. In many cases, we will fax or email this automatic stay to any creditor who has something pending such as a foreclosure case, sheriff’s sale, Citation to Discover Assets, Rule to Show Cause or any other court appearance. The official notice from the court will be received by the creditor approximately 5 to 7 business days after filing. However in many cases, we are doing a rush filing and we need to let a creditor know immediately before they take certain catastrophic action against our client. In those cases, we do fax or email the automatic stay and we do not rely on the court to send the official notice.
Now, the notice that I send entitled automatic stay is official, even though it is not coming from the court. It has the proper language, advising the creditor to cease-and-desist and importantly, it has the actual bankruptcy case number which that creditor can then verify with the bankruptcy court to know that a case has officially and legitimately and filed.
Now, in some cases, the automatic stay has to be either expended or imposed. What I’m referring to is a Chapter 13 case where there have been at least one or multiple filings before. For example, if you are filing Chapter 13 and you had a Chapter 13 case dismissed within the last year, then the automatic stay is only valid for 30 days unless extended by motion. My law firm will file a Motion to Extend the Automatic Stay if you had a prior case dismissed within the last year. If you have had two cases dismissed within the last year, then you have no stay. In those cases, we bring a Motion to Impose the Stay. Most often, the stay is either extended or imposed without objection from creditors.
However, the recent trend is for Chapter 13 trustees to object to the imposition or modification of the stay. I simply don’t know why the Chapter 13 trustees are getting involved in this issue. After all, they are not a creditor. They are supposed to work in administering the case for the benefit of all parties and they have specific duties that are enumerated in Section 704 of the United States Bankruptcy Code. More and more we are seeing trustees get involved in issues where they really shouldn’t have a say. My hope is that the judges will in the near future turn to the trustee and say since you are not a creditor and since there are no creditors objecting, I’m going to grant the debtor’s motion to either extend the stay or impose the stay.
In any event, the automatic stay is the protection that you as a debtor are looking for. Your attorney will help you obtain that automatic stay on filing and/or extend or impose the stay if you are in a Chapter 13 case where you have had prior cases dismissed within t
