The “Automatic Stay” provision of the bankruptcy code, is an immediate injunction preventing actions by creditors to collect debts from a debtor who has declared bankruptcy. The injunction begins at the moment the bankruptcy petition is filed. The stay stops creditors from the following: all communications; sending letters; telephone calls; lawsuits; wage garnishment; bank account levies; utility service shutoff; foreclosure actions; auto repossession; taking property; and, evictions.
This means that a foreclosure action stops immediately, no matter when the bankruptcy petition is filed. If the petition is filed the day before the sheriff’s sale, the sale is stayed. Also, if a person who files is behind with automobile finance payments, the finance company is not permitted to repossess the vehicle. A lawsuit stops the second the petition is filed. If a court hearing is scheduled for a lawsuit the day after the filing, there will be no hearing. If a creditor takes action in violation of the stay, such as obtaining a state court order after the filing, typically, the order is vacated or undone.
The stay will continue as to an unsecured creditor, such as a credit card debt creditor, in connection with a chapter 7 and chapter 13. However, the debtor may be required to take action to keep the stay in place, regarding a secured creditor, such as an auto finance company and mortgage company. If a chapter 7 debtor is behind with mortgage payments, at some point, the court will likely grant the mortgage company permission to proceed with the mortgage foreclosure action. If a chapter 7 debtor is behind with vehicle finance payments, the court will likely grant the finance company permission to repossess the automobile.
However, a chapter 13 debtor will be permitted to continue the stay against a mortgage company, if they are complying with a plan that provides for the resolution of the mortgage arrears. For example, if a debtor makes regular mortgage payments to the mortgage company, in addition to making trustee payments, that pays the mortgage company’s arrears, the stay will continue. The same basic process applies to a vehicle finance company, as well.
Robert Manchel is a New Jersey, Board Certified Consumer Bankruptcy Attorney, whose practice is limited to foreclosure resolution and bankruptcy law. For more information, please contact Mr. Manchel at (856) 797-1500, 1(866) -503-5655.
ROBERT MANCHEL HANDLES CASES FROM THE FOLLOWING COUNTIES: Cumberland, Atlantic, Monmouth, Salem, Gloucester, Camden, Burlington, Hunterdon, Somerset, Middlesex, Ocean, Mercer .
Manchel New Jersey Bankruptcy Law
Toll Free: 1(866)-503-5655
1 Eves Dr. Suite 111
Marlton, NJ. 08053
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https://www.bankruptcylawyer-nj.com