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The protection generated by an automatic stay motivates many people
to file, merely to prevent a pending home foreclosure, or vehicle
repossession, or adverse court ruling. The purview of the stay reaches
far beyond these benefits however, and prevents any person from
attempting to collect a debt listed in a Chapter 7 bankruptcy cases.
As a condition precedent, the debt must be listed in the appropriate
schedule, yet actual notice of filing is not required for enforcement.
The fact of filing alone (as evidenced by the clerks file stamp and
file number) creates sufficient legal basis for mandatory cease and
desist.
Violations of a Chapter 7 Bankruptcy Automatic Stay
The Code stay provisions are tempered in practice because of the
notice dilemma. Should any interested person not receive notice of the
effective filing date, and unintentionally violate a preexisting
automatic stay, courts hesitate enforcing sanctions. Yet if actual
notice was received, and a creditor intentionally violates the federal
stay law, courts are quick to hold violators in contempt.
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