Deficits of The Automatic Stay

In a certain instances, the automatic stay cannot help you. These occasions include the following:

• Certain tax proceedings. The automatic stay cannot prevent the IRS from auditing you, issuing a tax deficiency notice, demanding a tax return, issuing tax assessments and demanding payment of said assessments. However, the automatic stay will stop the IRS from issuing a tax lien or seizing your property or income.
• Support actions. The automatic stay does not stop any lawsuit against you seeking to establish paternity, nor lawsuits seeking to establish, modify, or collect child support or alimony.
• Criminal proceedings that can be broken down into criminal and debt components will be separated and the criminal component cannot be stopped by the automatic stay. 
• Loans from a pension. In spite of the automatic stay, money can be withheld from your income for repayment of loans from certain types of pensions, including most job-related pensions and IRAs.
• Multiple filings. If you already had a bankruptcy case pending during the previous year, then the stay will automatically be terminated after 30 days; unless you, the trustee, the U.S. Trustee, or a creditor asks for the stay to continue. Also, you must then prove that the current case was filed in good faith, and if a creditor has filed a motion to lift the stay during the previous case, the court will assume that you did not act in good faith, and it may prove difficult to receive the automatic stay in your present case. To often individuals and companies disregard the importance of consulting an experienced attorney and make hasty decisions or in many cases don't take any action. If you have property in the State of Connecticut or Massachusetts, be sure to get legal advice from a Connecticut Attorney.

Richard Croce - Rich@rrc-llc.com

What Can the Automatic Stay Accomplish?

The automatic stay can prevent utility disconnections – including water, electricity, gas, and telephone service - for at least 20 days. While prevention of utility disconnections is not typically a good enough reason to file bankruptcy, it can be one factor, especially for people in climates with severely extreme weather, and/or small children or elderly people in their home.

If your home mortgage is in danger of foreclosure, the automatic stay temporarily will stop those proceedings. However, the mortgage lender may be able to proceed with the foreclosure later, depending on what type of bankruptcy you are filing. An attorney can help you determine which type is best, and devise a plan to help you keep your house.

The automatic stay may be able to help you avoid eviction. New bankruptcy laws are making it easier for landlords to proceed with evictions, and if your landlord already has already filed a judgement against you before you file, the automatic stay will not affect the eviction proceedings, and the landlord can continue with the eviction as if you have never filed bankruptcy. Also, if your landlord claims you are damaging or endangering the property, or using controlled substances on the property, the automatic stay will not be in effect.

If you receive public benefits and were overpaid, the agency is typically allowed to collect the overpayment from your forthcoming payments. The automatic stay can prevent this collection.
Many people file for bankruptcy if their wages are garnished. Especially if more than one wage garnishment is imminent. The automatic stay stops garnishments immediately.
Richard Croce - Rich@rrc-llc.com

Automatic Stay

When you file for bankruptcy, the “automatic stay” will put an immediate stop to any lawsuits filed against you, as well as most actions against your property by creditors and collections agencies.

The automatic stay is often a dominant motivation for people to file for bankruptcy; especially in cases where they are at risk of foreclosure, eviction, being found in contempt of court for failure to pay child support, or losing necessary resources including utility services, welfare, unemployment benefits, or their job (due to wage garnishments).

The automatic stay can help with many problems including the following:

• Utility disconnections (including water, electricity, gas, and telephone service)
• Foreclosure proceedings
• Eviction proceedings
• Collection of overpayments of public benefits
• Multiple wage garnishments

There are also limits to what the automatic stay can do for you. The automatic stay cannot help in certain instances, including the following:

• Certain tax proceedings – however, the automatic stay does stop the Internal Revenue Service from issuing a tax lien and from seizing your property and income
• Support actions (child support and/or alimony)
• Criminal proceedings
• Loans from a pension
• Multiple filings

Also, creditors can sometimes sidestep the automatic stay by asking the bankruptcy court to lift the stay if it is not serving its proposed function. For instance, if you file for bankruptcy the day before your house is to be foreclosed, have no equity, and you cannot pay your mortgage debts, the mortgage lender will likely go to the court and ask for authorization to proceed with foreclosure proceedings. The court would likely grant permission. This information can be very overwhelming and it is always advised to seek professional advice from an experience Connecticut Law Firm should you reside or have a business in the State of Connecticut.
Richard Croce - Rich@rrc-llc.com