Exceptions to the Automatic Stay During a Bankruptcy Case
When a debtor files a bankruptcy case, the automatic stay comes into place. The automatic stay is a temporary injunction that requires most creditors to stop collection efforts against the debtor. The court will send notice to all the creditors listed in the debtor’s creditor matrix that the debtor has filed bankruptcy. Once a creditor receives notice, they are prohibited from contacting the debtor or initiating any actions. Common actions that are prohibited by the automatic stay and throughout bankruptcy include:
Initiating or continuing a lawsuit to collect a pre-petition debt
Initiating or continuing a foreclosure action
Initiating or continuing an eviction that has not gone to judgement
Acts of repossession
Setoffs by creditors of certain debts
Disconnection of utility services
Wage garnishment
Actions that are unaffected by the automatic stay
Certain types of creditors or actions are not covered by the automatic stay and those actions will be allowed to proceed during the bankruptcy case.
Criminal Proceedings – If a debtor is facing criminal charges the case will proceed as usual. The automatic stay will not stop the collection of restitution or fines that are ordered by the court in certain cases.
The portion of a Domestic civil cases that involve child support, child custody, or paternity.
The automatic stay will not stop domestic support collection or proceedings to suspend a professional or driver’s license for failure to meet domestic support obligations.
Some Tax Actions -while the IRS and State taxing authorities are not able to collect directly. They can perform tax assessments and audits during bankruptcy.
Certain Eviction Proceedings – If the landlord has obtained a judgment of possession, evicting based on illegal use of controlled substances, or evicting based on endangerment of the property, the landlord can continue its actions.
The automatic stay is one of the most powerful provisions in the bankruptcy code. The stay protects debtors from creditors until the end of the bankruptcy case with these (and a few other) limited exceptions. If you are involved in a court proceeding or action listed above, let your bankruptcy attorney know so they can help you prepare for the next steps. The automatic stay may apply to certain portions of a lawsuit, but not others and your bankruptcy attorney can sit down with you and explain what will happen.
If you have any questions please feel free to contact one of our bankruptcy attorneys. We have offices in Kansas and Missouri and handle a wide variety of consumer bankruptcy cases.
