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What is the Automatic Stay?

Automatic Stay

The primary reason for the automatic stay is to bring immediate protection to the person filing bankruptcy (the Debtor).  The automatic stay provides the debtor the chance to catch his or her breath, legally speaking.  There might be many different reasons a person filed bankruptcy.  Perhaps wages were being garnished, a vehicle repossessed, a house in foreclosure, or maybe creditors relentlessly call the debtor on the cell phone, at home, and worse of all, at work.  Or perhaps the debtor has reached the sinking realization that he or she is simply in too deep.

Regardless of the reason a person filed bankruptcy, the automatic stay provides instant legal relief from the Debtor’s creditors.  The goal of the automatic stay can differ slightly depending on the chapter that is filed.  For example, in chapter 7 the automatic stay prevents any further liquidation of the debtor’s assets by the debtor’s creditors.  This is so exempt property can be protected to enable the debtor to achieve his or her fresh start, and non-exempt property can be preserved until the chapter 7 trustee has the opportunity to fully analyze those non-exempt assets and determine if and how the trustee will administer those assets.

In chapter 13, the automatic stay also protects exempt assets for the benefit of the creditor as well as non-exempt assets for the benefit of the bankruptcy estate which allows liquidation of those assets for the benefit of creditors, or to allow the debtor some time to propose a plan which proposes how to handle those non-exempt assets (i.e. proposing to pay money into the plan to justify keeping them).  In chapter 13 bankruptcy, the automatic stay also allows the debtor to protect assets that will be necessary for the successful completion of the bankruptcy plan.  For example, if properly structured, a chapter 13 plan will protect the debtor’s wages from wage garnishment, even if the garnishment relates to a debt from a debt that became due after the bankruptcy was filed.

Call a Minneapolis Bankruptcy Attorney

Understanding and fully benefiting from the automatic stay can be a complicated process which requires advanced planning and strategy.  If you are considering bankruptcy, the automatic stay will play a pivotal role in helping you accomplish your goals.  If you are considering filing bankruptcy, contact a Minneapolis bankruptcy attorney to discuss your options.

Call Brea Buettner-Stanchfield at The Buettner Law Group, LLC at 612-377-5311 or e-mail now for a free consultation.



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