To The Rescue: The Automatic Stay In Indiana
Financial stress is a significant problem for many area families. About a quarter of Americans experience such severe financial stress that they experience PTSD-like symptoms. That obviously has a significant effect on their home and work lives.
This problem may soon get worse. The Supreme Court recently diluted some key provisions in the Fair Debt Collection Practices Act. Outside of bankruptcy, the FDCPA is the primary consumer protection law in this area. As a result, aggressive moneylenders may become downright belligerent, and there may be no way to stop them outside bankruptcy.
How Does the Automatic Stay Work in Illinois?
It’s possible to stop adverse action in civil court. However, debtors must normally show fraud or some other similar wrongdoing. Moreover, the lawsuit process is incredibly long. Relief may be months away if it is available at all.
In contrast, Section 362 of the Bankruptcy Code takes effect immediately upon filing, in most cases. It applies to both public and private moneylenders. As soon as creditors receive notice, they must immediately stop all adverse actions, including:
- – Repetitive phone calls,
- – Harassing letters,
- – Foreclosure proceedings,
- – Repossession plans,
- – Wage garnishment, and
- – Bank account levies.
If the debtor has filed bankruptcy once in the past six months, and that bankruptcy was dismissed without discharge, the automatic stay only lasts for thirty days. An Illinois judge will extend the automatic stay indefinitely in these cases if the debtor files a motion and has good cause. Most judges grant these motions without hearings.
The automatic stay lasts for the duration of the case. In a Chapter 7, discharge usually comes within a few months after filing. That action ends the debtor’s legal obligation to repay the debt, so there is no more adverse action. In a Chapter 13, the automatic stay lasts for the entire protected repayment period. So, in most cases, moneylenders cannot take any adverse action while debtors catch up on past-due secured debts. That includes things like home mortgage obligations and auto loans.
What’s the Catch?
There is almost always a catch to everything. Fortunately, with regard to the automatic stay in Chicago, there are very few drawbacks and they are easy to deal with.
One is the aforementioned obstacle to repeat filers. There is a presumption in the law that these individuals are “serial filers” who are trying to abuse the system. The presumption is very easy to overcome if the debtor has just one dismissed bankruptcy. It’s harder to overcome this presumption if the debtor has more than one recent dismissal.
Furthermore, debtors should be aware that moneylenders often interpret the automatic stay’s prohibition against “any communication” very broadly. They may stop sending monthly bills and cancel scheduled ACH withdrawals. You still owe the money. Be proactive and make alternative arrangements with the Illinois creditor.
Being upfront in a bankruptcy, and after a bankruptcy, eliminates many difficulties. If necessary, your attorney can usually make these phone calls for you. That’s especially true if the firm is committed to customer service.
Rely On Experienced Attorneys
Bankruptcy’s automatic stay eliminates stress. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle cases in Illinois and Indiana.
Resource:
forbes.com/sites/kateashford/2016/04/22/financial-stress/#506ee5a12753
