The automatic stay in Fort Worth bankruptcy cases is a fundamental provision under the Bankruptcy Code. The stay takes effect immediately when you file your bankruptcy petition in the bankruptcy court, acting as a court-ordered injunction that prevents most creditors from taking action against you or your property for outstanding debts.
This federal legislation provides immediate relief from threats of repossession, foreclosure, and other collection pressures. If you need legal guidance about the role of the automatic stay in Fort Worth bankruptcy cases, one of our bankruptcy attorneys could help you understand your rights and options.
What Is the Purpose of the Automatic Stay?
The purpose of the automatic stay is to provide you with relief from creditors who are pressuring you or pursuing legal action to obtain payment for your outstanding debts. In Fort Worth bankruptcy cases, the automatic stay functions as temporary relief, allowing you time to reorganize your finances. This could alleviate your concerns about lawsuits, asset seizures, and other actions against you that are associated with being unable to make payments on outstanding debts, whether for vehicles, real estate, personal or student loans, or credit cards.
The legislation aims to promote fairness among your creditors by preserving the status quo and ensuring an orderly resolution. Bankruptcy filings are common across the state for reasons that include high consumer debt and property values, and this relief prevents your creditors from racing to take action against you to protect their interests.
The Relief It Provides
The automatic stay prohibits your creditors, such as lenders and other financial institutions, from pursuing new legal action against you or continuing efforts to obtain payment from you for outstanding debts. This includes filing or continuing lawsuits against you from the time you file for bankruptcy until the court lifts the stay or discharges the bankruptcy. As a result, your creditors are prevented from pursuing actions such as:
- Evictions
- Foreclosures
- Repossessions
- Wage garnishments
- Bank account levies
Another function of bankruptcy protection in insolvency proceedings is to halt collection calls, letters, or any other form of harassment. This protection applies to all your creditors, whether for secured or unsecured debts. Further, it protects you from new liens on your property and disconnection of your electricity or other utilities.
Duration of the Stay
The stay remains in effect until your bankruptcy case is completed, dismissed, or you receive a notice of discharge. This process usually takes three to six months for a Chapter 7 bankruptcy and three to five years for a Chapter 13 bankruptcy. However, under 11 United States Code § 362, your creditors have the right to request that the court lift or terminate the stay if you fail to make payments you committed to at the beginning of the process, neglect to maintain insurance, or fail to pay your property taxes.
It is relatively common for creditors to file motions to request that the court lift the statutory injunction, especially regarding vehicles and real estate. The court conducts hearings on these requests to balance the rights of both debtors and creditors. However, the automatic stay does not affect certain obligations, such as child support payments or other family court matters. Our experienced lawyers in Fort Worth could answer your specific questions about the function of the automatic stay in your bankruptcy case.
Contact Us About the Effects of the Automatic Stay in Fort Worth Bankruptcy Proceedings
When you get behind on debt and have to deal with pressure and legal action from creditors, it can be overwhelming. The automatic stay serves to protect you in this situation—this court-ordered relief immediately stops most collection activities, giving you the breathing space you need to reorganize your debts or determine the best way to resolve your financial situation.
If you need legal assistance navigating the bankruptcy process and would like to learn more about the role of the automatic stay in Fort Worth bankruptcy cases, call Allmand Law Firm, PLLC today to schedule an appointment with our team.
