If you believe bankruptcy may be right for you, it’s crucial to understand what you can expect from this process. One of the most important things you need to know is the automatic stay and the circumstances under which a court might lift it. Please continue reading as we explore what you should know about these matters and how our experienced Gillette Bankruptcy Lawyers can guide you through this complex process.
What is the Automatic Stay?
If you’ve filed for bankruptcy in Wyoming, the court will issue an order called the automatic stay. This is a relief measure that stops all collection efforts while your bankruptcy case proceeds. This temporary injunction prohibits creditors from taking the following actions to collect debts against a debtor:
- Calling or writing to the debtor
- Wage garnishment
- Starting or continuing a lawsuit
- Foreclosing on the debtor’s property
The primary goal of an automatic stay is to halt collection efforts, giving debtors much-needed “breathing room” to get their finances in order without the pressure of immediate collection actions. If a creditor fails to cease collection attempt after being notified of the bankruptcy filing, they may face legal consequences.
It’s important to note that this order doesn’t prohibit actions that are considered to be in the public interest or personal obligations like family support. Therefore, an automatic stay won’t impact criminal restitution, collection of child support or alimony payments, certain tax-related measures, and actions to reinforce regulatory powers by a government entity.
When Can the Court Lift the Automatic Stay?
Contrary to popular belief, the automatic stay in bankruptcy is not absolute. This means creditors can ask the bankruptcy court to lift the order to allow collection efforts to resume. If the court grants the requestion, the creditor can continue pursuing debts.
In most cases, an automatic stay is lifted when a bankruptcy case closes, is dismissed, or when a discharge is granted or denied to the debtor. However, there are circumstances in which a creditor could face irreparable harm if they were prohibited from pursuing collection measures against the filer. As such, a creditor or collector can file a Motion for Relief to have the order lifted and continue collection efforts. This is often filed when a bankruptcy case involves home foreclosures, car repossession, or eviction. Essentially, creditors of secured debts are more likely to petition the court to lift the automatic stay in place because they have collateral. If you fail to keep up with monthly payments, the courts are likely to grant the order to lift the stay, as creditors have the right to reclaim the property if you default on a loan.
If you’re facing a motion to lift the automatic stay, please don’t hesitate to contact a Gillette bankruptcy lawyer from 307 Bankruptcy, who can help you understand your options and protect your assets. Connect with our firm today for guidance and skilled representation.
