During bankruptcy proceedings, people facing financial hardship receive multiple forms of legal protection and relief. Once they complete the bankruptcy, they can discharge their eligible debts. They can also end aggressive collection efforts by securing an automatic stay. Creditors typically need to stop making collection calls or pursuing legal action against those with an active bankruptcy case.
How long does the automatic stay issued at the time of a bankruptcy filing protect an individual pursuing a bankruptcy case?
Every filing is unique
There are numerous rules that govern the automatic stay granted in a bankruptcy case. Most of the time, filers have protection from the same day that they file through the day that the courts either dismiss their bankruptcy case or grant them their discharge.
However, there are certain exceptions to that standard rule. The first exception involves prior bankruptcy filings that the courts have recently dismissed. In scenarios where individuals have repeatedly filed for bankruptcy in a short amount of time, they may not be eligible for an automatic stay that takes effect immediately and lasts through the entirety of the bankruptcy.
Other times, creditors can petition the courts and ask to lift the automatic stay. In cases involving allegations of fraud and other forms of intentional financial misconduct, the courts may agree to allow a specific creditor to continue collection efforts despite the active bankruptcy case.
Those hoping to take control of their finances through a personal bankruptcy filing generally benefit from experienced insight into the rules that govern the automatic stay and collection activities during bankruptcy. Learning more about the bankruptcy process by speaking with a skilled legal team can help people optimize their protection and minimize their exposure during bankruptcy.