Mobile, AL Law Firm Guides Clients Through Bankruptcy

Alabama Bankruptcy Lawyers Ensure Compliance with Automatic Stay

When you file for bankruptcy, the day your paperwork is filed with the court, all collection efforts, including repossession, foreclosure, liens against your property, and wage garnishment must stop. This protection from unwanted or threatening calls and letters from creditors, collection agencies, and government entities is provided by what is known as an automatic stay.

How Does an Automatic Stay Work?

An automatic stay is temporary, and only suspends efforts to collect a debt while the bankruptcy case is open, and any creditor who wishes to proceed against the debtor must get permission from the bankruptcy court. In addition to suspending collection efforts from creditors, the automatic stay also stops the following, at least temporarily:

• Commencement or continuation of court proceedings that began prior to the bankruptcy filing
• Collecting on garnishments, levies, restraining orders, and post-judgment collection remedies made before the filing
• Attempts to apply setoff rights on debts incurred prior to the bankruptcy filing
• Creation, perfection, or enforcement of new liens on property included in the bankruptcy estate

Cease Contact Letters

If you have not yet filed for bankruptcy, federal law requires collection agencies to stop their collection efforts if they receive a written request from you to stop. The law does not apply to creditors collecting their own debts, although these creditors will often honor written requests also. If you decide to write such a letter, mail it by “Certified Mail with a Return Receipt Requested.” This will require the creditor to sign for the, and you will get a receipt back to use as proof that the creditor/collection agency received it.

Contact a Competent Alabama Bankruptcy Law Firm

Do you have questions about bankruptcy and the effect of the automatic stay? Contact the experienced Alabama bankruptcy lawyers Bond and Botes, P.C. online or call 1-877-581-3396 to set up your initial consultation today.