the bankruptcy alphabet brought to you by the letter a

Bankruptcy Alphabet-A is for Automatic Stay

New York Bankruptcy Attorney, Jay S. Fleischman, has began a series of blog entries entitled “From A to Z in the Bankruptcy Alphabet” and has thrown down the gauntlet for other bankruptcy attorneys to follow suit.

This series of blog posts will briefly focus on a bankruptcy term, give a short definition, and, if applicable, give an example of how the term may work.

So we start with A-

Photo by Poppy Thomas-Hill

A is for “Automatic Stay”. The Automatic Stay is an important aspect of bankruptcy law because it prohibits various activities against the debtor and the property of the bankruptcy estate. A “stay” is also called an injunction, which is a court order preventing a party to do a certain action. What makes the automatic stay so awesome is that it is automatically imposed upon the filing of the bankruptcy petition. No court order is necessary, because it goes into effect the second your attorney presses the file button.

11 U.S.C. §362 describes what the automatic stay is, what activities are prohibited and which are exempt. when the stay terminates, what happens by violating the automatic stay.

The following is a brief list of those activities that are prohibited:

Enforcement of pre-petition Judgments-§362(a)(2)
Exercising control over property of the estate-§362(a)(3)
Creating or Enforcing a Lien on property of the estate-§362(a)(4),(5)
Collection of pre-petition debt-§362(a)(6)
Setoff of Debt-§362(a)(7)

The following are activities that are not prohibited:

Criminal actions-§362(b)(1)
Cases regarding paternity and child support-§362(b)(2)
Tax Assessments-§362(b)(9)
Expired Leases on Non-Residential Property-§362(b)(10)
Retirement Account Loan Repayment-§362(b)(19)
A setoff of an income tax refund by governmental unit-§362(26)

The automatic stay terminates when the following happens:

The Bankruptcy Trustee abandons property of the estate;
Closing or dismissal of bankruptcy case;
Granting or denial of discharge;
When requested by a party in interest.

The Bankruptcy Code provides Debtors with a powerful tool if parties violate the automatic stay; these include an award of actual damages, attorney fees and, sometimes in appropriate circumstances, punitive damages. §362(k).

As you can see, the automatic stay is a powerful instrument in protecting a debtor’s interests.

-Ryan D. Caldwell is a Omaha and Lincoln, Nebraska Bankruptcy Attorney and strives to provide clients with compassionate legal care in areas bankruptcy, family law, creditor’s rights, estate planning, and probate.

Other Bankruptcy Lawyers talking about the Letter A are as follows:

the bankruptcy alphabet brought to you by the letter a

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