Winsor Law Group Blog

By: Joseph G. Urtuzuastegui III, Esq.

Disclaimer: This article is for informational purposes only. If you have questions about filing bankruptcy, please fill out our short questionnaire and Winsor Law Group will set up a consultation to see if bankruptcy is the right option for you. We are a debt relief agency. We help people file for relief under the Bankruptcy Code.

While bankruptcy is not a cure-all for financial difficulties, it has been designed to be a very useful tool to help individuals get back on track. There are two fundamental pillars of any bankruptcy, the first is the bankruptcy estate and the second is the automatic stay. Upon filing a bankruptcy petition, all creditors of an individual, with limited exceptions, must stop collection activity of the obligations incurred by the individual prior to the petition. Some creditor actions stayed are judgments obtained before the petition was filed, repossession actions, and collection actions. In fact, it is much more expedient to list the types of obligations that are not covered by the stay.[1] The benefit of the automatic stay is that it gives an individual reprieve from harassing collection calls and mail allowing a person to begin on their road to financial recovery.

          The length of the automatic stay will usually last for the duration of the bankruptcy proceeding. However, the court may grant a creditor relief from stay after notice and a hearing in the court. Usually, if the court decides it is necessary to lift the stay it is because there is a “lack of adequate protection” for a party with interest in property. The reasoning for adequate protection is codified in the Code: “An under secured creditor may be entitled to adequate protection to ensure against the decline in value of its collateral. Where there is the possibility of a diminution of a creditor’s collateral interest, a debtor may be required to provide the creditor with adequate protection, such as periodic cash payments.”[2]

          Nevertheless, the benefits of the automatic stay for an individual in dire need of relief is unmeasurable. Getting the creditors off one’s back can be beneficial to a persons mental well-being, and while bankruptcy is stressful, the automatic stay is but one way to help ease an individuals worries and get them back on a path to their fresh start. If you, or anybody you know, need help determining whether bankruptcy is a viable option, contact us today to schedule your free thirty minute consultation. Winsor Law Group can get you on a path to help you get back on track!

*The information provided in this article is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, does not create an attorney-client relationship, and you should not act upon it without seeking independent legal counsel.