How Does an “Automatic Stay” Work in Pennsylvania?

Automatic stays are one of the major benefits of filing for bankruptcy in Pennsylvania. Let our lawyers explain the ins and outs of this feature of bankruptcy and help you keep the automatic stay in effect throughout your entire case.

Automatic stays work by prohibiting creditors from continuing lots of debt collection activity. That includes garnishing your wages, filing lawsuits against you, and repossessing your vehicle. Automatic stays should last throughout bankruptcy unless this is your second filing within the year or a creditor successfully motions to lift the stay, which we can help avoid. Tell us about any contact from creditors, as violating the automatic stay comes with serious consequences.

Get a free case review from our Philadelphia bankruptcy lawyers when you call Young, Marr, Mallis & Associates today at (215) 701-6519.

How Do Automatic Stays Work in Pennsylvania?

Generally, an automatic stay takes effect when debtors file for bankruptcy in Pennsylvania. This stay pauses most debt collection efforts, giving you the immediate relief you need when entering bankruptcy.

When the automatic stay takes effect in a case, creditors must stop the following actions:

• Wage garnishment

• Foreclosures

• Repossession

• Lawsuits

• Collection calls and letters

Automatic stays do not stop the collection of alimony or child support payments, so keep that in mind if these debts are part of the reason for filing your bankruptcy case.

Before filing for bankruptcy, creditors might garnish wages, send intimidating collection letters, or even threaten to repossess your vehicle or foreclose on your home. Filing for bankruptcy alone triggers an automatic stay, signaling to creditors that they must stop contacting you about repaying debt outside of the bankruptcy case.

Automatic stays are relatively straightforward, though many debtors don’t realize they are part of filing for bankruptcy. Let us use the automatic stay in your case to your advantage, as well as all the other beneficial aspects of bankruptcy.

How Can Debtors Use the Automatic Stay in Pennsylvania?

When an automatic stay goes into effect in a bankruptcy case, it gives debtors time to take a breath, evaluate their financial situation, and make a plan to address it. We utilize this period effectively by reviewing all debts, listing creditors, and determining the best course of action forward.

If you file Chapter 7, we may use the automatic stay to identify which of your assets we will liquidate to repay creditors. If you file under Chapter 13, we can use the period immediately following the automatic stay’s effective date to create your repayment plan, which we must submit to the court for approval soon after filing.

Does an Automatic Stay Halt Criminal Proceedings in Pennsylvania?

Generally, an automatic stay imposed as part of bankruptcy proceedings does not halt criminal proceedings against the bankruptcy petitioner. While being in debt is not a crime, certain crimes may be related to unpaid debts, and you may need a criminal defense attorney.

Do Criminal Proceedings Stop Because of an Automatic Stay?

Usually, an automatic stay does not affect possible criminal proceedings against the bankruptcy petitioner. An automatic stay is a civil court order and does not extend beyond your bankruptcy problems.

While the automatic stay may stop creditors from calling you and trying to collect payments on debts, it does not stop the authorities from pursuing criminal charges related to your unpaid debts or other facts surrounding your bankruptcy case.

For example, if you are suspected of fraud in relation to unpaid debts for which you are filing for bankruptcy, you may be arrested and charged even if the automatic stay is in place.

Restitution and Fines from a Criminal Case

Some of your financial problems may stem from restitution or fines imposed as part of a criminal sentence. This extra financial strain might even be a contributing factor to your filing for bankruptcy. However, the automatic stay imposed as part of your bankruptcy does not usually affect restitution or criminal fines.

You must continue paying these debts even as your bankruptcy case is pending. On top of that, the automatic stay usually does not interfere with the ability of governmental entities to collect payments for certain debts.

Can Creditors Initiate Criminal Actions if an Automatic Stay is in Place?

You might wonder whether creditors can press criminal charges for unpaid debts while an automatic stay is in place. This is a reasonable question, but it is important to note that private people or entities do not initiate criminal proceedings; the state does. However, creditors may file criminal complaints against creditors despite an automatic stay.

It is also important to note that simply failing to pay a normal debt is not a criminal offense. You cannot be arrested, charged, or prosecuted for being unable to pay ordinary debts. However, creditors may file criminal complaints if they believe your debt is related to criminal fraud.

Criminal Proceedings Initiated by Creditors in Bad Faith

One thing creditors may not do is initiate criminal proceedings against debtors to circumvent automatic stays. Creditors are sometimes so keen to collect the money owed to them that they will file bogus criminal complaints to scare the debtor into paying.

If you file for bankruptcy and learn that one or more creditors have filed criminal complaints against you, talk to your lawyer immediately. Unless there is real merit to these criminal complaints, creditors must abide by the automatic stay and refrain from pursuing payment.

Possible Crimes Related to Debt

While failing to pay debts is not a crime, and creditors may not attempt to collect payments while an automatic stay is in place, the situation is different for debts related to court orders.

For example, if someone fails to pay debts imposed by courts (e.g., child support), they may be held in contempt of court and arrested. Remember, this is for defying court orders to pay, not necessarily for simply carrying the debt. An automatic stay will not prevent the authorities from arresting you for failing to pau court ordered debts.

Similarly, you may be criminally charged and arrested regardless of an automatic stay for crimes related to unpaid taxes. More specifically, you may face serious criminal penalties if your unpaid taxes are allegedly due to tax evasion.

What Happens if a Creditor Threatens Criminal Action After an Automatic Stay?

If you file for bankruptcy and the bankruptcy court issues an automatic stay, tell your lawyer immediately if creditors threaten any legal action, including filing criminal complaints.

The automatic stay is meant to prevent creditors from harassing bankruptcy petitioners about unpaid debts while the bankruptcy case is pending. While it does not prevent new criminal actions, creditors should not use threats of criminal action to intimidate debtors into paying.

Your attorney can raise this issue with the bankruptcy court. Depending on how the creditor made these threats, they may face serious consequences.

Can I Be Sentenced to Jail While an Automatic Stay is in Place?

An automatic stay will not stop a criminal court from imposing a jail or prison sentence. If you are facing criminal charges while your bankruptcy case is pending, it is crucial to talk about the situation with your lawyer. If you are sentenced to jail while your bankruptcy case is pending, your bankruptcy attorney may be able to take over the case and handle it in your absence while you serve your jail or prison sentence.

Keeping up with a bankruptcy case from jail or prison is possible, but it can be very difficult. If you are on a Chapter 13 payment plan, you must continue to keep up with monthly payments or risk having your bankruptcy case dismissed.

Do Automatic Stays Always Last Throughout Bankruptcy?

First-time bankruptcy filers always qualify for an automatic stay in Pennsylvania. The automatic stay typically remains in effect throughout the entire bankruptcy case, although there are circumstances under which it may end prematurely.

Repeat Filings

If you’ve filed for bankruptcy previously in the past year and the case was dismissed, an automatic stay may only last for 30 days. Our Stroudsburg, PA bankruptcy lawyers can motion the court to extend the automatic stay in this scenario, explaining why you deserve extended relief from debt-collection actions.

You don’t get an automatic stay without successfully motioning for it if you have two or more cases within the past year that were dismissed and refiled.

Motions from Creditors

Mortgage and car lenders with liens on debtors’ property often motion to lift automatic stays. If their motions are successful, creditors may pursue vehicle repossession or mortgage foreclosure, even if the bankruptcy case is still happening.

Creditors with ongoing litigation against debtors might also file motions to lift automatic stays; in such cases, we can help keep stays in effect.

Judges may also grant motions to lift automatic stays if debtors fall behind on payments during bankruptcy or fail to fulfill other obligations. Let us handle your case, craft your repayment or liquidation plan, and fight against unfair motions to lift an automatic stay.

Failure to Submit Statement of Intention

In Chapter 7 bankruptcy cases, petitioners must submit a Statement of Intention explaining how they plan to repay secured debts. You have the earlier of 30 days from filing your bankruptcy petition or by the first date of the meeting of creditors to submit the Statement of Intention, or the automatic stay in your case gets lifted. However, our lawyers may motion to extend it.

Whether you bring a Chapter 7 bankruptcy or a Chapter 13 case, we can create a plan to address your debt before we file. That way, we are prepared for additional filing deadlines throughout the case and avoid common roadblocks to resolving cases.

Case Dismissals

If your bankruptcy case gets dismissed before all debts are repaid or discharged, the automatic stay is lifted. If you still owe debts to creditors, they might resume collection tactics. This includes wage garnishment, mortgage foreclosure, vehicle repossession, and other similar actions.

Call us if your case gets dismissed in Pennsylvania, and we can refile a successful bankruptcy petition on your behalf.

How Do I Know if a Creditor Violated an Automatic Stay?

Creditors can face serious consequences for willfully violating an automatic stay in Pennsylvania. Attempts to contact you for repayment outside the bankruptcy case may violate the automatic stay, so tell us immediately.

Continuing wage garnishment, lawsuits, foreclosures, repossession, or initiating this activity once an automatic stay is in effect violates it. Tell us about any letters, phone calls, or other communication attempts from creditors, and give us any documentation you have of such contact.

For automatic stay violations, creditors may be required to pay damages to the debtor and face court orders to cease their actions. They may even lose their right to seek repayment.

Willful violations differ from technical violations, which our lawyers can differentiate. We can bring violations to the court’s attention. If you’re unsure whether or not a creditor has violated the automatic stay, tell us what happened, and we can determine if they have.

FAQs About Automatic Stays in Pennsylvania Bankruptcy Cases

What is the Point of an Automatic Stay in a Pennsylvania Bankruptcy Case?

The purpose of an automatic stay is to stop creditors from contacting debtors about unpaid debts. It also prevents creditors from taking any legal action to collect debts, such as filing a lawsuit against the debtor. If creditors continue to contact you despite the automatic stay, tell your lawyer immediately.

Will an Automatic Stay Stop Criminal Proceedings?

No. An automatic stay imposed as part of bankruptcy proceedings is a civil order that only affects civil aspects of your bankruptcy case. Specifically, it prevents creditors from contacting you or taking civil action against you while bankruptcy proceedings are pending. It has almost no effect on criminal matters, even ones related to your bankruptcy case.

How Long Does an Automatic Stay Last in a Pennsylvania Bankruptcy Case?

The automatic stay is usually effective almost immediately after a bankruptcy petition is filed. How long the automatic stay lasts depends on how you file for bankruptcy. For example, for Chapter 7, the automatic stay may last for several months, usually as long as it takes to complete the liquidation process. For Chapter 13, it may last for the duration of your payment plan, or 3 to 5 years.

Can Creditors Initiate Criminal Proceedings if I Fail to Pay?

No. First, creditors are not governmental authorities and cannot initiate any criminal proceedings on their own. A creditor may file a criminal complaint if it believes your failure to pay is the result of a crime, such as fraud.

Call Our Bankruptcy Attorneys in Pennsylvania Now

Get a free case assessment from our West Chester, PA bankruptcy lawyers and call Young, Marr, Mallis & Associates at (215) 701-6519.