Whether you file for Chapter 7, Chapter 11 or Chapter 13 bankruptcy, the bankruptcy court provides you with protection after you file your bankruptcy petition. That protection comes in the form of an automatic stay. The automatic stay temporarily stops your creditors from coming after you when they had been previously attempting to collect on debts. The automatic stay stops all collection actions, including vehicle repossession and home foreclosure.
After you file your Chapter 13 bankruptcy petition, the automatic stay goes into place. The automatic stay prevents your creditors from coming after you for a specified period of time. If your bankruptcy case lasts for three years, then the automatic stay will be in place for three years. If your bankruptcy case lasts for five years, then the automatic stay will be in place for five years. The Bankruptcy Code defines the type of collection actions that must cease after the automatic stay has gone into place.
Section 362 of the United States Bankruptcy Code provides that the automatic stay is applicable to the commencement or continuation of any judicial, administrative or other action against you to recover a creditor claim; the enforcement of a judgment against you or your property; any act to obtain or exercise control over property of the bankruptcy estate; any act to create, perfect or enforce any lien against property of the bankruptcy estate; any act to create, perfect of enforce any lien against you; any act to collect, assess or recover a claim that arose against your prior to the commencement of the bankruptcy case; the setoff of any debt owed by your prior to the commencement of the bankruptcy case; and the commencement or continuation of a proceeding before the United States Tax Court concerning your tax liability for the period prior to the order for relief being issued.
If you have property in your possession on which a creditor has a lien, that creditor can petition the bankruptcy court to lift the automatic stay. A secured creditor will more than likely move to lift the automatic stay when property of significant value is uninsured or subject to an unacceptable risk and in your possession; when the property is depreciating rapidly, and you have no intention of paying for the property; and when you have defaulted on your mortgage and appear unable to cure arrearages or make mortgage payments.
If the bankruptcy court decides to lift the automatic stay for a particular creditor, the court will grant an adequate protection order. The bankruptcy court will grant an adequate protection order, requiring you to make payments or give up the property, when the automatic stay is not serving its intended purpose.
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