Automatic stay is a potent consumer device that offers protection while consumers are seeking bankruptcy. A bankruptcy automatic stay by definition is a temporary evaluation that gets placed automatically once an individual or company files bankruptcy petition.
As listed in the US bankruptcy code section 362, the automatic stay will provide security to those seeking bankruptcy from almost all creditors. Creditors are also barred from taking any action against the individual seeking bankruptcy from the moment the bankruptcy case is filed. The automatic stay feature applies on every bankruptcy case and it provides unique benefit to the filers.
Limitations of the Automatic Stay
Automatic stays obviously have some boundaries. Certain legal actions like criminal cases, tax audits and family court proceedings do not accommodate under purview of the stay.
Who Can Lift the Automatic Stay?
The main aim behind the bankruptcy code is providing security to creditors who have various interests in income and property of the debtor. This does not mean that just anyone who has some property interest in the debtor's estate can claim relief from automatic stay. The relief can only be sought by secured creditors, those who have tort claims or those who are actually the co-owners of the estate.
Procedure for Lifting the Stay
Once the automatic stay has been imposed, it can be modified or lifted only by the court. Creditors can make this possible by filing a motion. If there are a number of creditors, even a single creditor can wish to seek relief. Relief can also be of several forms including modification, termination and conditioning. In the case of termination, the stay gets eliminated. Modification of stay allows creditors to go ahead with certain actions that have been forbidden from the stay. Conditioning allows some requirements that the trustee or editor must satisfy in order to continue with stay.
Significance
This procedure that facilitates relief from automatic stay is in favor of creditors and it un-does the unjustified claims from the debtor. The laws are meant to do justice to both the debit and creditors. For correct procedure, it is important that one should consult a good bankruptcy attorney.
