What is Automatic Stay, Limitations and Impact?

What is automatic stay?
A filing of bankruptcy is all that required to trigger an automatic stay. Of course, this is an awesome instrument of power which can stop anything and everything after filing.  The relief is brought in a simple but complex step of filing of bankruptcy—nothing more needed to be done on behalf of a consumer. The automatic stay goes into effect even if there is a defect in the filing of bankruptcy. (Wekell v. United States, 14 F 3d 32 (9th Cir. 1994). The power of these provisions extends to many things  In effect, there is no other remedy so effective than the filing of bankruptcy.

Many changes were made to the automatic stay provisions by the 2005 amendments to the Bankruptcy Code.  The basic purpose of the stay is to protect the debtor and his or her property.  Once done right, it can stop all collections calls, all harassment issues and all actions in foreclosures.

How long the Duration Stay?
Generally, it can last 30 days or longer, until a motion to lift stay is granted which again is time consuming thing. Given all that, it may last longer, sometime for the duration of the case.
If no prior case was dismissed in the year before filing of the chapter 7 petition, the statute provides that the stay continues until the following dates:
–    To the extent that the stay is based upon provisions barring an act against property of the estate, the earlier of:
–    The date such property is no longer property of the estate (usually the date property is abandoned, or the date it is deemed abandoned at the close of the case under 11 U.S.C. Section 554(c)
–    The date on which an order of the court terminating stay becomes effective or by inaction of the court upon a request for relief from the stay.
–    To the extent the stay is against any other act, the earlier of the following:
–    The date the case is closed.
–    The date the case is dismissed
–    The date a discharge is granted or denied.
–    The date on which an order of the court terminating the stay becomes effective.
Sometime a lazy or inefficient may not do anything, and thus the stay can be prolonged.
You also demonstrate good faith for extensions of stay past thirty days.
The stay also is applicable to the co-debtors.

What Acts Are Prohibited by the Stay?
The automatic stay also prohibits, subject to the exceptions found in section 362(b).
–    Any act to collect, access or recover a claim against the debtor that arose before the commencement of the case.
–    The setoff of any debt owing to the debtor that arose before the commencement of the case against any claim against the debtor, and
–    The commencement or continuation of a proceeding before the United States Tax Court concerning the tax liability of an individual debtor a prepetition taxable period.

What are the exceptions to the automatic stay?
Criminal proceedings
Family laws
Student Loans
Continued withholding of income for loans from retirement funds.

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