In combination with the discharge, the automatic stay is the reason debtors file for bankruptcy protection through an Alsip bankruptcy lawyer. Upon filing, the automatic stay protections are triggered and prevent creditors from engaging in any collection activity whatsoever. The automatic stay applies to most creditors and will stop wage garnishments, lawsuits, foreclosure sales, vehicle repossession, telephone calls, and generally every other collection activity. Most creditors will stop sending bills or statements to debtors; if debtors wish to keep a vehicle, they should continue making voluntary payments by mailing them directly to the creditor.
The automatic stay does not generally apply to criminal proceedings or actions to collect domestic support obligations.In some situations, typically involving repeat filings under Chapter 13, the automatic stay may last only 30 days but can be extended by motion in bankruptcy court. In rare circumstances, the stay may not exist at all, and may need to be imposed by motion.Violation of the stay is punishable by sanctions, which can include an award of attorneys’ fees and punitive damages.
In Chapter 7 cases where debtors are claiming bankruptcy, most secured creditors will file a motion to lift the automatic stay, which allows them to exercise their security interest in the collateral. This effort is most common involving mortgage lenders, but can also be used by vehicle lien-holders. In a Chapter 7 case, the motions will almost always be granted.
In Chapter 13 cases, a creditor will file a motion to lift the stay if a debtor fails to stay current with their post-petition mortgage payments or otherwise impairs the collateral. If a debtor fails to provide funds to get current on their obligations, the motion will likely be granted.
The §341 Meeting is typically the only time the debtors will need to actually do anything other than speak with their attorney. Here are the bankruptcy basics of the 341 meeting of creditors. Debtors must bring identification and proof of their social security numbers to the §341 Meeting. At the §341 Meeting, the debtors will meet with the trustee and the trustee will generally ask them questions, under oath, regarding their financial situation. The purpose of the meeting is to ensure the accuracy of the bankruptcy petition, and to give the trustee an opportunity to accurately determine if there are any assets. Creditors are allowed to attend the §341 Meeting as well; as practical matter, most never attend. Creditors who do attend are allowed to ask questions.Generally speaking, most §341 Meetings last between 5 and 10 minutes and are highly routine.
In Chapter 13 situations, the meetings may be a bit longer, and it is not uncommon for the trustee to ask for changes to be made to the proposed bankruptcy plan. Don’t worry about having to make those changes yourself. You are not going to file bankruptcy yourself. You are going to file with the assist of excellent counsel who will guide you through the process with care. If an issue should arise, you can consult with your attorney and get answers to your questions.