The Automatic Stay in Bankruptcy: What are the Exceptions?
Filing for bankruptcy may offer great reward in the end as you are offered newfound financial freedom, but there is generally very little to get excited about otherwise–until the automatic stay kicks in. This is a major bonus to what can sometimes be a complex process, offering relief from creditors as soon as you file for bankruptcy, whether it be Chapter 7 or Chapter 13. Suddenly, debt collectors are reined in. Collection activity is brought to a halt in most cases, and can even offer you relief from student loans, foreclosure on your home, and repossession of a vehicle.
There are exceptions to the automatic stay though, to include:
- Family court matters are almost always excepted. There are no automatic stays on child support or alimony. Numerous actions cannot be delayed or stopped such as modifications to support, custody or visitation, efforts to secure back child support, plans to test for paternity, the issuing of protective orders regarding domestic violence, and more.
- Evictions can be excepted too if the landlord can prove that the tenant is using illegal substances on the property or somehow ‘endangering’ the grounds. The automatic stay may also not cover the eviction if the landlord already had a judgment for possession before the bankruptcy was granted.
- Tax issues are generally brought to a halt by the automatic stay in bankruptcy, but there are some IRS activities that cannot be halted such as audits, assessments and payments for them, as well as requiring tax returns and giving deficiency notices to taxpayers.
The automatic stay does not apply in every instance of filing for Chapter 7 or Chapter 13, generally to avoid abuse of the system. If you have filed for bankruptcy previously, you may find that the length of the automatic stay is abbreviated—generally if you already filed once in the year. If you filed twice in the previous year, there will probably not be any automatic stay offered at all. The automatic stay can also be lifted by creditors who petition the court and show good reason that it should not apply to the debts they are trying to collect on—often secured debts like a mortgage or car.
If you are thinking about filing for bankruptcy or exploring other options for debt reorganization, contact us at Fitzgerald & Campbell, APLC. Our attorneys have decades of experience in serving clients in similar financial situations. Let us review your case and discuss what would work best for you. We are here to help!
Call us today for a free consultation at (855) 709-5788, or email us at email@example.com.
Posted in: Bankruptcy