To help people who are in financial difficulties rebuild their finances, the federal bankruptcy code was created. An order commonly called “automatic stay” is one of the most powerful tools. It’s designed to ensure that all creditors are treated equally by the bankruptcy petitioner. The automatic stop was created to make sure that no creditor can take advantage of another creditor once the bankruptcy petition has been filed. This is how it works.
The Basics
A stay is a judicial order issued to prevent one or more parties from taking the actions listed in the stay order. The clerk prepares a stay order for all creditors that are identified in the bankruptcy petition. All creditors are instructed to immediately stop any attempts to collect the debtor’s claims by the stay order. The stay applies to the “initiation or continuation,” including the issuance of or employment of process against the debtor.
There Are Exceptions
Certain types of debt are exempted from the effects of the automatic stay language. These include claims for past due child support, alimony, taxes, and actions to establish paternity or resolve child custody issues.
Conclusion
Because it prevents any action from foreclosing residential mortgages, the automatic stay offers debtors protection. It also helps debtors keep their family home. The bankruptcy code has many exceptions to the automatic stay’s effect.
This post was written by Trey Wright, one of the best bankruptcy lawyers in Jacksonville FL! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, specializing in bankruptcy law, estate planning, and business litigation.
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