Hi. Matt McArthur, bankruptcy attorney at Clear Counsel Law Group. Welcome back.

Today what I wanted to discuss was an issue that often comes up during our free consultations that we offer here at Clear Counsel Law Group, and that is the topic of the automatic stay and its limitations.

Now you'll remember from previous videos, if you've had a chance to view those, that the automatic stay is the federal law that goes into place upon filing a bankruptcy that protects the person that has filed for bankruptcy from harassing creditors and from collection efforts by other creditors that are trying to collect on this debt.

Now this is a very powerful protection, and it's one of the most looked forward to benefits by individuals filing for bankruptcy because it stops phone calls, it gives them a little bit of breathing room, allows them to keep their car or their house a little bit longer while they're dealing with the financial mess that they find themselves in.


Limitations of the Automatic Stay

Related to this conversation is: What limitations are there? Is there any sort of limit placed upon my ability to keep my car or my house in a chapter 7 bankruptcy? As you would expect, yes, there are limitations.

What those limitations are, are found in the bankruptcy code: It allows a creditor to ask the court for permission to terminate the automatic stay before the bankruptcy case has ended if certain conditions are present.

Now in a chapter 7 bankruptcy, the only condition that needs to be present is that the property which has the loan tied to it is worth less than what the outstanding balance of the loan is.

In other words if you're underwater on your house, if you're underwater on your car payments, if you owed fifteen-thousand dollars on your car, for example, but the car's only worth twelve or ten, then the conditions are present in a chapter 7 case for that creditor to ask for termination of the automatic stay so that they can pursue their state law remedies.

The state law remedies would be foreclosure or repossession of the vehicle.


A Few Practical Considerations

One of the practical considerations that we look at in this situation is if you are current on your monthly payments on your mortgage, or your car payment, it's very unlikely that a creditor would pursue a termination of the automatic stay to pursue their state law remedies because the state law is not going to allow them to repossess the vehicle, or foreclose on a house, if you're making your monthly payments.


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It would be an exercise in futility, or it wouldn't make any sense, for these creditors to ask for court permission and incur all the legal expenses associated with that, only to be able to sit on that right and not exercise any state law remedies ... Not being able to foreclose or take the car back.

Now if you're thinking of filing for chapter 7 bankruptcy, this is one of the things that we review in detail about your case before we file the case and potentially subject you to a situation where you would lose your car or your house.


I Will Examine Your Unique Situation

There are other options available as well that we'll explore; Potentially filing a chapter 13 case that would give you a little bit more protection than a simple chapter 7 case.

If you're at all worried about keeping property, especially property that still has loans attached to it inside of a chapter 7 bankruptcy or inside of a chapter 13 bankruptcy, please come in and visit with me.

The consultation is free.

The advice is free.

It doesn't hurt to come in and get that information so that you can make the best decision possible for you.

Again, there's no obligation. That first consultation is completely free.

I hope to hear from you soon so that we can talk about getting your case started as soon as possible.


Clear Counsel Law group

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Henderson, NV 89012

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