Bankruptcy
Automatic Stay - A Guide
By Brian
Joneta
Automatic stay is a potent consumer device that offers
protection while consumers are seeking bankruptcy. A bankruptcy
automatic stay by definition is a temporary evaluation that gets placed
automatically once an individual or company files bankruptcy petition.
As listed in the US bankruptcy code section 362, the
stay will provide security to those seeking bankruptcy from almost all
creditors. Creditors are also barred from taking any action against the
individual seeking bankruptcy from the moment the bankruptcy case is
filed. Its feature applies on every bankruptcy case and it provides
unique benefit to the filers.
Limitations of the
Automatic Stay
These obviously have some boundaries. Certain legal
actions like criminal cases, tax audits and family court proceedings do
not accommodate under purview of the stay.
Who Can Lift the
Automatic Stay?
The main aim behind the bankruptcy code is providing
security to creditors who have various interests in income and property
of the debtor. This does not mean that just anyone who has some
property interest in the debtor's estate can claim relief from
automatic stay. The relief can only be sought by secured creditors,
those who have tort claims or those who are actually the co-owners of
the estate.
Procedure for
Lifting
the Stay
Once the stay has been imposed, it can be modified or
lifted only by the court. Creditors can make this possible by filing a
motion. If there are a number of creditors, even a single creditor can
wish to seek relief. Relief can also be of several forms including
modification, termination and conditioning. In the case of termination,
the stay gets eliminated. Modification of stay allows creditors to go
ahead with certain actions that have been forbidden from the stay.
Conditioning allows some requirements that the trustee or editor must
satisfy in order to continue with stay.
Significance
This procedure that facilitates relief from stay is in
favor of creditors and it un-does the unjustified claims from the
debtor. The laws are meant to do justice to both the debit and
creditors. For correct procedure, it is important that one should
consult a good bankruptcy attorney.
Brian Joneta also writes about Bankruptcy and Credit
issues including Declaring Personal Bankruptcy and Cost
of Declaring Bankruptcy
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