Richmond, Virginia. Filing a petition under chapter 7 of the bankruptcy code “automatically stays” (stops) most collection actions against the debtor or the debtor’s property. Filing the petition does not stay certain types of actions listed under 11 U.S.C. § 362(b), and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.
The debtor should consult an attorney to determine the best way to deal with their creditors and how the automatic stay would impact them. Ronald Page, PLC has experience representing consumer debtors in chapter 7 liquidations.