When an individual or business faces mounting debt with no feasible pathway to repayment, bankruptcy can be a viable option to discharge or reorganize these obligations. When you have debts you cannot afford to pay, filing for bankruptcy can achieve multiple goals, including securing an automatic stay.
An automatic stay in Madison bankruptcy cases refers to the process that stops creditors from taking any actions to collect debt, enact garnishments, foreclosures, repossession, or other related actions until further notice. Our knowledgeable bankruptcy attorneys focus on legal proceedings and can advise you on the best course of action for your case.
When you are pursuing a Chapter 7, 11, or 13 bankruptcy, which are the most common in Madison bankruptcy cases, you will receive an automatic stay as soon as the petition is filed. The automatic stay is essential to help individuals and business owners in financial distress avoid further complications due to punitive creditor actions.
The automatic stay acts as an immediate injunction, prohibiting most lawsuits, legal proceedings, collection efforts, lien attachments, and other efforts that would otherwise subject a debtor to harassment from creditors. Another purpose of the automatic stay is to preserve the value of the debtor’s assets, whether they choose to liquidate non-exempt assets and discharge debt or pursue a reorganization plan while keeping a business running.
The automatic stay typically remains in effect for as long as the bankruptcy case in process. Sometimes, a creditor may file a motion for relief from an automatic stay, seeking to modify the plan’s terms. For example, this can happen in a Chapter 13 bankruptcy case if the lender is not receiving promised payments from the debtor.
An attorney can help fight a motion to modify an automatic stay by showing proof that you made your payments or negotiating with the lender to help you catch up on past due payments. If the court approves a creditor’s motion to lift an automatic stay, the creditor can use any legal means to collect on the unpaid debt.
An automatic stay in Madison bankruptcy cases has some limitations. For example, it does not stop the collection of child support obligations the debtor may be under.
A debtor facing punitive actions from the Internal Revenue Service, such as an audit or tax liens, will also not face relief from these measures under an automatic stay. If a debtor is facing criminal proceedings involving financial penalties unrelated to the bankruptcy debt, these penalties must be satisfied regardless of an automatic stay.
If a debtor has a history of multiple bankruptcy filings, this can impact the scope of an automatic stay. An automatic stay may not be available in the next filing for a debtor with one or more prior cases in the next year.
An attorney can ensure you receive maximum protection under the automatic stay in Madison bankruptcy cases. Whether you file under Chapter 7, 11, or 13 of the Bankruptcy Code, we will leave no stone unturned to help you seek a fresh start after suffering a financial crisis.
Our experienced lawyers can explain the various legal options available to you for debt relief through a bankruptcy filing. Contact our firm today to schedule your free case review and get the dedicated legal help you need for your case.
Gillman Capone Law Group
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