The Automatic Stay in Chapter 7

The “Automatic Stay” is a period of time after filing for bankruptcy in which creditors are temporarily barred from attempting to collect debt from you. It has also been defined as “a self- executing, universal injunction that goes into effect the moment a case is filed and keeps most creditors from exercising control over the assets of the Bankruptcy Estate.” It also helps to ensure that no single creditor receives too much from the debtor in terms of assets and liquidation.According to Section 362 of the U.S. bankruptcy code, during the automatic stay the following are punishable offenses by creditors:- Pursuing or filing a lawsuit to collect debt;- Issuing citations or garnishing wages;- Foreclosing mortgages or liens;- And demanding payment verbally or in writing.All creditors which are identified in your petition will receive notice of your case from the Court Clerk, and under bankruptcy law, a creditor can be punished by the Bankruptcy Court for violating an automatic stay even if it was not aware that the stay was in effect. Any creditors which violate your automatic stay regardless of awareness may be punished with injunctive, monetary, or even punitive damages.If you are struggling financially and considering filing for Chapter 7 bankruptcy, you’re not alone. Contact an experienced bankruptcy attorney today for a free consultation.