When a bankruptcy is filed, there is an Automatic Stay that goes into effect. Think of the Automatic Stay as a protective bubble for the debtor. While the Automatic Stay is in effect, most creditors are prohibited from any collection efforts. This includes calling the debtor, writing the debtor, showing up at his house, going to recover your property, etc. There are some exceptions to the stay, including domestic support obligations (DSO) such as child support.

Violating the Automatic Stay is a big no-no. You may find yourself faced with a proceeding where the debtor seeks to recover damages against you for violating the Automatic Stay.

In certain instances, you may be able to ask the court for Relief from the Automatic Stay which will allow you to recover the secured property (for example, in case of a car) or proceed with certain proceedings such as a foreclosure or lawsuit.

Posted in: Creditor Rights in Bankruptcy