Automatic Stay

The Automatic Stay provisions of Section 362 of the Bankruptcy Code operate to stop the vast majority of secured and unsecured creditors from engaging in any collection activity against a debtor or the debtor's property once a petition in Colorado is filed. As an experienced Denver bankruptcy lawyer, David M. Serafin will immediately request that the Automatic Stay immediately arise without the need for a prior hearing in Colorado Bankruptcy Court. For virtually all of our clients, the Automatic Stay allows the debtor to experience a (usually permanent) reprieve from the stress of being sued, garnished, levied upon, having a bank account frozen or otherwise harassed by creditors.

The Automatic Stay provisions are less generous for those having already filed for bankruptcy within one year or less prior to the current filing but there are circumstances in which a special motion can be filed requesting the standard collection prohibitions.

The Law Office of David M. Serafin will aggressively employ the Automatic Stay to prevent creditors from taking the following actions (the creditor is also required to take reasonable steps to halt already commenced collection efforts such as stopping an impending foreclosure sale or wage garnishment):

• Continuing to litigate a claim arising before the bankruptcy petition was filed, or filing a new lawsuit after the filing,
• Mailing any letters, calling or initiating any in-person contact at all to collect a debt,
• Foreclosing on a home or repossessing a vehicle or other personal property absent a signed court order granting Relief from Stay (which typically takes weeks to months for the Court to hear and which requires secured creditors to prove that its security interest is otherwise in jeopardy - if the property has negative equity or is uninsured, or if the debtor has defaulted on monthly payments),
• Demanding collateral to secure an existing debt, and
• Perfecting a lien against secured property.

However, the Automatic Stay does not prohibit creditors from collecting on the following debts:

• Attempts to establish paternity or enforce an existing child support or spousal maintenance order,
• Criminal prosecutions,
• IRS or Colorado Department of Revenue tax audits, and
• Eviction actions by landlord with a possession judgment for residential real estate.

In chapter 7, the debtor typically has the following options in lieu of the secured creditor obtaining Relief from Stay:

• Retain and continue to make monthly payments on the secured debt,
• Reaffirm the secured debt (recommended only in rare instances because the Reaffirmation Agreement re-obligates the debtor to a new debt which will be required to be paid, absent a subsequent filing years down the road),
• Redemption of the collateral (which assures the debtor continued ownership if the property but only if the property's fair market value is paid for - generally in one lump sum - a tall task for most in bankruptcy), or
• Surrender the property and discharge any deficiency balance.

Conversely, in chapter 13 matters, secured and unsecured creditors alike are bound by a confirmable monthly payment plan ranging from 36 to 60 months. A creditor will be less likely to file a Motion for Relief from Stay in situations whereby the likelihood of a confirmable plan is higher. Unlike with a chapter 7 case, the debtor behind on secured debt payments can usually avoid a Relief from Stay request by simultaneously curing such arrears through the plan and continuing to make regular payments directly to the lender outside the plan.

The Law Office of David M. Serafin will advise you as to which types of collection efforts are enjoined by the bankruptcy automatic stay provisions. An experienced Denver bankruptcy lawyer, David M. Serafin will also fight to make sure your creditors strictly abide by the Automatic Stay and cease any and all collections efforts against you or your property. On countless occasions, we've successfully compelled turnover of any monies or assets taken from a debtor in violation of the automatic stay. Additionally, the Law Office of David M. Serafin will request continued protection under the automatic stay for bankruptcy debtors who have recently filed for bankruptcy within the past year.