Role of the Automatic Stay in Dallas Bankruptcy

When you file for bankruptcy in Dallas, something called the “automatic stay” is put into place — effectively stopping creditors in their tracks. Not only can the automatic stay protect you against lawsuits regarding the debt that you owe, but it can also shield you from any further collection efforts by creditors, collection agencies, or government entities.

Essentially, the automatic stay was designed to stop creditors from seizing property that belongs to the bankruptcy estate, as well as any property that is exempt by state or federal law. In most cases, its reach will extend to foreclosures, auto repossessions, wage garnishments, and debt collections, making it a powerful tool for debtors.

With an automatic stay in place, creditors are prohibited from:

• Beginning or continuing a lawsuit
• Continuing their debt collection efforts
• Repossessing a debtor’s property
• Garnishing a debtor’s wages
• Foreclosing on a debtor’s home

The automatic stay puts all debt collection efforts on hold. It does not do away with your debts. Thus, it is important to work with a bankruptcy attorney to collect information from your creditors and develop a liquidation or payment plan, depending on whether you are filing Chapter 7 or Chapter 13.

An automatic stay is immediately initiated when you file for bankruptcy in Dallas. Whether you choose to file Chapter 7 or Chapter 13, you will be able to utilize an automatic stay. When you file your initial bankruptcy petition, all of your creditors will be notified of the pending bankruptcy. They will immediately have to pause collection efforts and legal actions. Other pending legal cases will also pause as the bankruptcy court assesses your belongings and evaluates your debt.

The automatic stay in a Dallas bankruptcy case prohibits creditors from continuing their collection efforts; however, there are certain circumstances under which a creditor could ask the court to remove or “lift” the stay. This is typically true of a creditor who has a lien on your property, although any creditor has the right to request that an automatic stay be lifted.

Your creditor’s request to lift the automatic stay may be granted if you have:

• fallen behind on your car payments
• fallen behind on your mortgage payments
• not maintained home or auto insurance
• delayed debt repayment in Chapter 13
• continuously failed to pay your rent

These situations all involve failure to maintain payments on your debts after you file for bankruptcy. The automatic stay will put a hold on all creditor actions against you initially. However, if you fail to upkeep payments during and after bankruptcy, then creditors can request a lift of the automatic stay.

If the bankruptcy court considers you a “serial” or “repeat” bankruptcy filer in Dallas, you may not benefit from an automatic stay. If you have filed bankruptcy once within the past year and the court dismissed it, your automatic stay will only be valid for 30 days after a new filing within the same year. In addition, if you have filed for bankruptcy two or more times within the past year and the court dismissed the claims, you will not get an automatic stay at all. These exceptions are only in place for a period of one year. If it has been more than one year since you filed and dismissed a bankruptcy, then you do get the benefit of an automatic stay.

If a creditor violates the stay by continuing their collection efforts, attempting to seize your property, or garnishing your wages, the court can penalize them. The court can also hold liable anyone who willfully violates the automatic stay in your Dallas bankruptcy case for actual damages caused by the violation and, in some cases, even punitive damages.

If you are facing financial troubles and have considered filing Chapter 7 or Chapter 13 bankruptcy, do not hesitate to speak with a bankruptcy attorney at Allmand Law Firm, PLLC. As the largest bankruptcy filing firm in the state, we have helped thousands of people find relief from their debt. Now, we’re ready to help you.