Chapter 13 Bankruptcy: The Automatic Stay

One of the most beneficial aspects of filing for Chapter 13 bankruptcy is the Automatic Stay. This is an order from the court that goes into effect as soon as you file, protecting you from collection actions by creditors. The automatic stay prevents your creditors from continuously harassing you to collect debts. Once you file for Chapter 13 bankruptcy, most collection activity on the part of your creditors must go through the bankruptcy court and most creditors can’t take any further actions while the bankruptcy is pending.

In regards to collection activities by creditors, federal law prohibits this activity by debt collectors as soon as you tell your creditor, in writing, that you do not want to be contacted. Also, if you verbally explain to the debt collector that you refuse to pay, it is illegal for them to continue contacting you except for one final letter demanding payment before filing a lawsuit. Telling your creditor to stop generally works, but you may have to send a written follow up letter.

How Long the Automatic Stay Lasts

The reason the automatic stay is “automatic” is because you don’t have to ask the court to issue it and the court does not have to take any special action to put it into effect. By law, it becomes active the moment you file for Chapter 13 bankruptcy. It prohibits creditors and debt collectors from attempting to collect your debt directly from you unless the law or bankruptcy court says they can. In some cases, your creditor can file a motion to have the automatic stay lift, or they can just begin collection activity without permission from the court.

The automatic stay will be in effect until:

  • the court approves your Chapter 13 repayment plan, or
  • your case is dismissed

The stay ends when your Chapter 13 plan is approved because the bankruptcy court and trustee will be governing all creditor and debtor behavior, including collection activities. The plan confirmation is a federal court order and any attempt on the part of a creditor to collect a debt covered by the plan is a violation of the order.

For a free, friendly, and confidential consultation, please contact us at the Goldbach Law Group.

About Marc Aaron Goldbach

Marc Aaron Goldbach has worked tirelessly to develop a successful bankruptcy and civil law practice for clients located throughout Los Angeles County. Mr. Goldbach at GoldBach Law Group have represented a wide array of small businesses and individuals with 100% client success rate. Mr. Goldbach is always available to answer questions and willing to guide you through the entire legal process.
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