People pursuing personal bankruptcy may need to wait months or possibly even years before they are eligible for a discharge of their debts. The duration of the bankruptcy process depends in part on the type of bankruptcy filed and also on a variety of unique factors, such as the amount of debt and the number of pending bankruptcy cases awaiting hearings in the same jurisdiction.
Thankfully, those filing for personal bankruptcy do not need to wait for a discharge to have relief from debt collection efforts. The filer also has protection from collection activity due to an automatic stay. Creditors often have to stop making collection calls and may even need to dismiss lawsuits when the automatic stay preventing collection efforts is in effect.
How long does that protection generally last in a personal bankruptcy case?
The automatic stay is temporary
Protection from collection activity is a key benefit of personal bankruptcy. The automatic stay usually takes effect the same day that the filer submits paperwork to the courts. It remains in effect until the courts either grant them their discharge or dismiss the bankruptcy case.
In scenarios where people do not meet the necessary requirements for bankruptcy or fail to follow appropriate procedures, the courts may dismiss the bankruptcy case without granting a discharge first. When there is no longer a pending bankruptcy case, the automatic stay is no longer in effect.
Occasionally, individual creditors may ask the courts for relief from the automatic stay. They may petition the courts and ask for permission to continue collecting on a debt or to reinitiate a lawsuit they previously dismissed.
In such cases, creditors can convince the courts that fraud or some other complicating factor limits the filer’s protection. In those situations, collection activity may resume even while the bankruptcy case is still in progress. Every filing is unique, but most people can count on the automatic stay continuing to protect them until they receive their discharge.
Securing the guidance of a bankruptcy lawyer can help people understand the automatic stay and the limitations on the protection it provides. Filers with proper legal guidance can avoid mistakes that could lead to the courts lifting the automatic stay early for certain creditors or dismissing their bankruptcy instead of granting them a discharge.