What Actions Are Prohibited by the Automatic Stay? – As a debtor, you may be wondering, “What actions are prohibited by the automatic stay?” Essentially, the stay prevents creditors from pursuing collection actions against you. While the stay stops the IRS and state governments from collecting your tax debt, you can still be audited, receive an assessment, or receive notices about your tax liabilities.
The automatic stay will prevent most creditors from contacting you or starting a lawsuit. It also prevents the government from garnishing wages, collecting taxes, or pursuing collection actions. This means that your creditors cannot collect overpayments from you until your bankruptcy case is closed. However, you still have to pay your bills as they come due, including employee wages, vendor invoices, and other operating expenses. Otherwise, the automatic stay will dissolve and you will be forced to pay them.
Timing is critical when it comes to filing for bankruptcy. Timing is crucial, because it can either boost or diminish the automatic stay’s power. If you file your bankruptcy petition early enough, you may be able to stop the lawsuit before it is heard. However, if you file too late or do not act quickly enough, you risk losing the protections of the automatic stay. If you’re planning to file for bankruptcy, make sure you consult a bankruptcy lawyer to protect your rights. If you are unsure, you can file a motion or complaint in the court.
Unlike Chapter 7 and 11, the automatic stay does not require a court to grant a debtor the right to file for bankruptcy. In addition to stopping the collection of debt, the stay prohibits creditors from initiating new legal proceedings, such as foreclosing on the debtor’s property. Creditors may also request that the automatic stay be lifted if it would affect the value of assets that the debtor owns.
Useful website: https://www.scura.com/blog/what-actions-are-prohibited-by-the-automatic-stay…