The Automatic Stay
One of the main features of the Bankruptcy Code is that it seeks to administer the process of the bankruptcy in an orderly and organized fashion. Outside of bankruptcy, creditors rush to the courthouse to be the first to file suit and get a judgment. The first one with the judgment gets to execute and levy on the defendants assets and those who are not so quick to file suit, find themselves with uncollected judgments and no remaining assets to pay their claims.
Bankruptcy accomplishes this organized approach in several ways. The filing of the simple Bankruptcy Petition, even without the Schedules or other papers invokes the automatic stay under 11 U.S.C 362.
Automatic Stay Lawyer in Cincinnati and Kentucky
The automatic stay is one of the most significant protections in bankruptcy. You can seek the protection of the automatic stay with the Cincinnati automatic stay lawyers at Steiden Law Offices. We will carefully review your creditors' claims and help you determine what the automatic stay may mean for you. You can seek relief from harassment, foreclosure and wage garnishment with the automatic stay. Call us today at to set up a free consultation.
We have offices in Cincinnati, Covington and Florence, and can serve clients throughout Hamilton County, Kenton County and Boone County.
Defining the Automatic Stay in Southern Ohio
The automatic stay is an injunction that prohibits creditors from taking any further action to collect a debt or further pursue a claim against the debtor or any of the debtor’s property. This means that any pending foreclosure is stopped, all civil suits are stayed, any pending eviction is stayed, efforts to repossess the debtor’s car or any action to collect a debt or any action against the debtor’s property comes to a halt.
The benefit of the stay is that it immediately removes the stress and pressure from all of the collection activity. This break in the action allows the debtor to begin the process of the fresh Start, free from the constant ring of collection calls and the piles of collection mail. The stay also preserves the status quo for the Trustee to the Court. Some debtors have free and clear assets that may be taken by the trustee and sold for the creditors. The stay stops this activity so the Trustee can administer the free and clear asset and sell it for the benefit of all the creditors, not the first creditor to rush to the courthouse.
Violations of the automatic stay can be serious and the Bankruptcy Court has the power to enforce the stay with serious financial sanctions. In some instances the stay and certain events happen at or near the same time or so close it is not possible to determine which event occurred first in time. The Bankruptcy Code gives the Trustee or the debtor certain avoidance powers to undo certain events such as a foreclosure sale or the repossession of a car. Because these events happened while the stay is in effect, they are considered void ab initio or invalid from the outset with no legal force or authority. The purpose is to preserve what is called the ‘Bankruptcy Estate’ so an orderly and organized bankruptcy can proceed.
It is common for certain types of creditors to file a Motion with the Court seeking ‘relief’ from the stay. These are almost exclusively secured creditors whose security includes real estate or motor vehicles. It can include almost any type of security or collateral; for example boats, construction equipment, jewelry and certificates of deposits or other financial instruments.
Automatic Stay in Chapter 7 vs. Chapter 13
In Chapter 7 cases, because no repayment plan or mechanism is in place, secured creditors file Motions in Chapter 7 cases for ‘Cause’ so they can go back to state court and complete a foreclosure or an eviction case. Most often these types of motions are resolved by negotiation through bankruptcy counsel and rarely end up in Court.
In Chapter 13 cases, depending on the case and the contents of the Chapter 13 Plan, Motions for relief are filed to ensure ongoing post-petition payments such as your house payment or a car payment. The treatment of the creditor’s claim in the Chapter 13 Plan would be pivotal in the Court addressing the motion. These post-petition payments made to secured creditors may be the contractual payment amount you have been making all along. It may be a reduced payment or no payment at all pending the Court’s valuation of the security. These payments are known as adequate protection payments and they protect the secured creditor’s interest in the security.
Steiden Law Offices | Covington Attorney for the Automatic Stay
If you're seeking protection from harassment, foreclosure and wage garnishment, the automatic stay may be exactly what you need. Contact the automatic stay lawyers at Steiden Law Offices to discuss bankruptcy options with an experienced bankruptcy attorney serving Cincinnati, OH; Covington, KY; Florence, KY, ad nearby areas. Call today to schedule a free consultation.