The Chapter 7 Bankruptcy Invocation of the Automatic Stay

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.