How Long Does a Bankruptcy Automatic Stay Remain in Effect?

 Posted on July 28, 2023 in Automatic Stay

One of the primary reasons that individuals choose to file for bankruptcy is that filing a case in bankruptcy court initiates an automatic stay. Once the automatic stay is in place, most collection activity – including wage garnishment, creditor lawsuits, repossessions, and foreclosure actions – must cease until a filer’s bankruptcy case is resolved or the court grants a creditor-specific allowance to bypass the restrictions of the automatic stay. As a result, while the benefits of the automatic stay are undeniable, filers cannot count on them to last forever.

Taking Advantage of the Stay: Chapter 7

Most successful Chapter 7 bankruptcy cases are resolved in a matter of months. As a result, the automatic stay only tends to function as a short “pause” button on creditor action for Chapter 7 filers. Meaning, once a filer’s eligible debt has been discharged at the conclusion of their case, the automatic stay will lift and any collection action that has not been resolved via discharge will resume.

A few months is generally not enough time for a low-income filer to get caught up on overdue secured debt accounts of any significant amount, so speaking with an attorney about how to manage any non-dischargeable debts effectively post-bankruptcy is an effort worth making.

Taking Advantage of the Stay: Chapter 13

By contrast, Chapter 13 filers enter into a repayment period that lasts three-to-five years. Therefore, the protections of the automatic stay last long enough that even homeowners who are several mortgage payments behind can generally get caught up by the time that the automatic stay is lifted. As a result, some debtors who qualify for Chapter 7 bankruptcy protection opt to file for Chapter 13 relief instead, simply because the pause on creditor and collection activity lasts so much longer during a successful Chapter 13 process.

Learn More by Speaking with a San Antonio Bankruptcy Lawyer Today

If your financial situation could benefit from a significant pause in creditor and collection-based action, you may benefit from discussing your situation with a trusted San Antonio, TX bankruptcy lawyer. Filing for bankruptcy is not the best debt relief option for everyone. But, by scheduling a confidential case evaluation at no cost, you will be in a stronger position to decide whether it might be the best option for you, uniquely.

To schedule your pressure-free environment, reach out to the firm today by calling 210-342-3400 or visiting the contact page of the website. You could start benefiting from the automatic stay in just a few days. Call today to learn more.

Source:

https://www.cacb.uscourts.gov/faq/automatic-stay-what-it-and-does-it-protect-debtor-all-creditors