The Automatic Stay

When you file a petition under the Bankruptcy Code under Title 11, U.S.C, the court imposes an "automatic stay" against most debt collection activities and lien enforcement as provided in 11 U.S.C.A. § 362(a). The stay is an injunction that prevents any third party from taking any action to create, to perfect, or to enforce a lien against property of the debtor and property of the estate under § 362(a)(4)-(5).

Under section 362 of the United States Bankruptcy Code, the automatic stay begins the moment the bankruptcy petition is filed. An automatic stay gives the debtor a period of respite so that the debtor will have an opportunity to make the appropriate plans for reorganization or liquidation.

The stay remains in effect until the bankruptcy proceeding is concluded or the property is no longer included in the bankruptcy estate. An injunction for an automatic stay applies to both real and personal property. It also applies to both voluntary and involuntary bankruptcy actions.

Attorney explains the Automatic Stay in Dallas, TX

Contact an experienced bankruptcy attorney in Dallas, TX, at Littlefield Law Firm to learn more about the automatic stay. Contact us to find out more about how long an automatic stay will last in Chapter 7 or in Chapter 13 bankruptcy. Find out when a "Motion for Relief from the Automatic Stay" might be granted, allowing the automatic stay to be lifted.

At Littlefield Law Firm, our bankruptcy attorneys can help you ensure that your rights are protected under the automatic stay while you go through the bankruptcy process. We can also help you take the appropriate action if any provision in the automatic stay is violated because of creditor misconduct.

Call us at (972) 812-0900 to discuss your case.

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The Automatic Stay Information Center

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When the Foreclosure Sale is a Voidable Transfer

Even when there is no actual notice of the existence of a stay, and the sale was conducted in good faith, the foreclosure is still a voidable transfer. Under 11 U.S.C.A. § 549(c), the post-petition foreclosure sale is not subject to being voidable if:

  • the transferee is a good faith purchaser;
  • the purchaser has no knowledge of the commencement of the case;
  • the purchaser tenders consideration of a value equal to the present fair market value of the real property at issue; and
  • the property is located other than in the county where the case is commenced unless a copy of the bankruptcy petition is filed in the real estate conveyance records of the county in which the property is situated.

The post-petition purchaser of real estate is granted a lien on the property to the extent of the value given when:

  • the purchase was made in good faith;
  • the purchaser was without knowledge of the case; and
  • the purchase was for less than the present fair market value.

The Bankruptcy Code in 11 U.S.C.A. § 362(b)(3) provides an annual exception to the automatic stay for the attachment of post-petition ad valorem tax liens in Texas.

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Exceptions to the Automatic Stay

There are a very few exceptions to the automatic stay. The collection of ongoing support is a major one. Also, in a situation where the debtor had a case pending that was dismissed within the one year preceding the filing of the bankruptcy, the stay is limited to 30 days unless the debtor receives a Court Order Extending the Automatic stay.

If there was more than one case pending that was dismissed during the one year preceding the bankruptcy filing, however, then the stay does not go into effect unless the debtor moves the court for an Order Imposing the Automatic Stay. Linda Littlefield has successfully filed both kinds of motions, and is familiar with the kind of evidence that the judges in Dallas and Plano want in order to either extend or impose the automatic stay.

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Creditor Misconduct for Violation of the Automatic Stay

After you file for bankruptcy, creditors are not allowed to contact you about collecting the debt. If a creditor contacts you, you should document the date, time, and manner of the violation. In some cases, the violations are so flagrant that your bankruptcy attorney can file an adversary proceeding to stop the creditors from violating the automatic stay.

Be sure to get the name of the caller, the name of their employer, which creditor they represent, how much they believe is due, and the reason for the phone call.

The attorneys in Dallas, TX, at Littlefield Law Firm can help you bring a motion for damages for creditor misconduct for violations of the BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005).

Although a creditor might be upset that they will lose money if their debt goes unpaid, the creditor is prohibited from engaging in creditor misconduct. In fact, the creditor might be subject to contempt sanctions if the parties continue a foreclosure proceeding or other act to collect on a debt owed them with actual knowledge that the bankruptcy case as begun.

If you have a creditor that has knowingly violated the automatic stay, you can ask the court to award you attorney fees to compensate you for the actual damages caused by the creditor's contemptuous actions. Linda Littlefield has experience in petitioning the court to find a creditor in contempt of an automatic stay to enforce the rights of the debtor.

Call Littlefield Law Firm at (972) 812-0900 to learn more about the relief provided by an automatic stay during bankruptcy proceedings.

This article was last updated on Monday, February 12, 2018.

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Linda Littlefield