The Automatic Bankruptcy Stay in Decatur, Georgia

The automatic bankruptcy stay is a common legal term that simply means all creditors are prohibited from taking any steps to collect on debt when a debtor files bankruptcy. If you are a Decatur, Georgia or Dekalb County resident who is facing foreclosure, garnishment, car repossession or just an overwhelming amount of debt that you cannot pay, filing bankruptcy will provide you with some relief through the automatic stay. The stay is actually a court order issued by a bankruptcy judge upon the filing of a Chapter 7 or Chapter 13 bankruptcy case.

The stay requires any actions that have already been started to be halted. Thus, where a mortgage company has already scheduled a foreclosure on a home, a bankruptcy filing will require the mortgage company to stop the foreclosure proceeding. In Dekalb County, the foreclosure notice is published for four weeks in the Dekalb Champion, which is the county’s legal paper. Even after the mortgage company has published the foreclosure for four weeks, a homeowner can file bankruptcy as late as the day before the foreclosure is scheduled, and the mortgage company must stop the foreclosure.

The automatic stay works the same way for garnishments or lawsuits. If you have been sued by a creditor in Dekalb County State or Magistrate Court and are scheduled for a hearing but you file bankruptcy before the hearing, the creditor is not allowed to proceed with the garnishment case or the collections case. In fact, the bankruptcy court has authority over all matters concerning debt, and a bankruptcy judge’s authority to decide on those matters trumps a Dekalb county judge’s authority. In the case of a garnishment, even if your bank or employer has sent money into the Dekalb county court pursuant to the garnishment, a bankruptcy filing will require the clerk to turn the money back over to you or in some cases to the bankruptcy trustee.

Where your car creditor is threatening repossession, a Chapter 7 or Chapter 13 filing also works to stop the repossession. Even if your car has already been repossessed, you can file bankruptcy within 10 days of the repossession to get your car back!

Even creditor phone calls are prohibited by the automatic stay. Once you file bankruptcy, a creditor cannot even call you to ask for payment. Written communication is also a violation of the stay. Many creditors are cautious to send monthly billing statements or even accept payments from debtors for fear of violating the automatic bankruptcy stay.

The strength of the automatic bankruptcy stay is strong. Even where creditors are left off of the bankruptcy petition, a subsequent realization that a debtor has filed bankruptcy, whether orally or by means other than notice from the bankruptcy court, requires the creditor to abide by the automatic bankruptcy stay law.

Any violation of the automatic stay could subject creditors to sanctions or punishment by the bankruptcy court. A debtor who is seeking sanctions against a creditor for wrongfully foreclosing on a home or wrongfully repossessing a car must file a special motion with the bankruptcy court asking for the sanctions. Obviously, the debtor must also show the court that the creditor violated the bankruptcy stay in order to obtain monetary sanctions against the creditor.

As you can see, the automatic bankruptcy stay is effective for protecting debtors from most creditor actions. Thus, if you are facing foreclosure, garnishment, repossession, or any type of creditor threats in Decatur or Dekalb County, Georgia, filing Chapter 7 or Chapter 13 will probably offer you strong protections. To schedule a free consultation with a Dekalb County bankruptcy attorney, please call Law Offices of Charles Clapp at 404.585.0040.