Filing for bankruptcy in New York is often a very difficult decision for many. Though it can provide much-needed financial relief, you’ll find that it can negatively impact your credit. However, if you’ve decided that this process is in your best interest, it’s imperative to understand what you can expect from this process. One of the most important things you should know about is the automatic stay and when the court can order to lift it. The following blog explores what you should know about these matters and the importance of working with an Orange County consumer bankruptcy lawyer to guide you through this process.
What Is the Automatic Stay?
When you file for bankruptcy, you’ll find that you are granted something called the automatic stay. Essentially, this is a relief measure provided to filers to help stop collection measures while your bankruptcy case proceeds. Once you file, your creditors will be notified of this decision. As soon as they are notified, they must cease all collection efforts, including contacting you regarding debt, foreclosures, lawsuits, and wage garnishment, among other measures.
It’s critical to understand, however, that this stay does not prohibit all collection activity. For example, if you are involved in other court matters, like a personal injury case or family law matter, generally the stay will not extend to cover these matters. Similarly, if you are facing collection for matters like unpaid taxes or outstanding child support, you will not receive relief for these circumstances.
You should note that the automatic stay will remain in place for the entire duration of your bankruptcy case. As such, if you’ve filed Chapter 13, this means you are protected until your case is closed, which is anywhere between three and five years, depending on your circumstances.
Can the Court Lift the Automatic Stay?
There are several circumstances in which a court would lift the automatic stay. First and foremost, however, it’s imperative to understand that the automatic stay is in place to protect the debtor. However, there are circumstances in which a creditor could face irreparable harm if they cannot pursue collection measures against the filer. As such, a creditor or collector may file a petition for the court to lift the automatic stay so they may continue collection efforts against the filer.
In most instances, you’ll find that creditors of secured debts are most likely to petition the court to lift the orders. This is because they have collateral. As such, if you are behind on payments, the courts are likely to grant the order to lift the stay, as the creditor has the right to reclaim the property if you fall behind on debt.
As you can see, filing for bankruptcy can be a complicated process, especially as there are several important considerations that must be made. That is why our dedicated legal team at the Law Offices of Michael D. Pinsky, P.C., will do everything possible to help guide you through these matters so you can focus on setting yourself up for financial success in the future.
