Hello, I’m James Flexer, an attorney at the
Law Offices of James Flexer. We have three offices in the Middle Tennessee area, in Nashville,
in Columbia, and in Murfreesboro, Tennessee. We have six lawyers that are dedicated to
bankruptcy and many paralegals to assist you. And today I’m going to talk to you about the
automatic stay. The automatic stay is a statute under the bankruptcy code. It’s a federal
statute: 11 United States Code 362. Now the automatic stay is the law that makes creditors
instantly stop trying to collect debt from you as soon as you file bankruptcy. The automatic
stay is what is called “injunctionary relief.” And by “injunctionary,” what it does is it
prohibits or stops creditors from being able to take any action against you or else they
will be in violation of the automatic stay. Now it’s kind of like a restraining order,
which some people may be familiar with from divorce or domestic cases, where an individual
is restrained from taking any further action against, let’s say, a husband or wife. Well
the bankruptcy automatic stay is similar in that it restrains the creditor from taking
any action whatsoever against you, unless they can get permission of the bankruptcy
judge to do so. But in order to get permission from the bankruptcy judge, they have to file
a motion for relief from the state or request permission from the judge to allow them to
try to collect from you. Now normally, when you file a bankruptcy (and they are electronically
filed now), as soon as we electronically file it with the federal government, they assign
your case a case number. As soon as that case number is assigned to you, there is an automatic
restraining order that’s put into place. But you do not have to go file for a restraining
order; it’s automatic upon filing the bankruptcy. If any creditor does attempt to collect from
you after they know about the bankruptcy, and sometimes even without knowledge of the
bankruptcy, they are in violation of the automatic stay. If they know about the bankruptcy and
still try to contact you, ordinarily our judges will sanction or assess penalty or attorney
fees against them for those prohibited acts. Now if they don’t know about it, the judge
will normally call that a technical violation and be less inclined to sanction them. But
they are still in violation of the law and cannot do that. If any of your creditors call
you after you file bankruptcy with us, you should immediately call our office so we can
contact that creditor and advise them that they’re breaking the law and that we may very
well take action against them. The automatic stay– let’s shift gears for a moment, because
the automatic stay also places kind of like a force-field over all of your property. As
soon as you file bankruptcy, it’s kind of like your watching a movie and everything
has to freeze. I use those examples to explain that when you file a bankruptcy, the second
you file it, there is once again a restraining order that affects every single creditor that
says, “You can in no way take any of this debtor’s property. You cannot take action
to get their property. You cannot sue them. Anything you do has to go through bankruptcy
court.” Now that is important, because when your property is under the automatic stay,
even a person who is not a creditor is still subject to the automatic stay. Your property
becomes property of the United States government; it becomes property of the bankruptcy estate
until the bankruptcy trustee abandons the property. Now that doesn’t mean that someone
is going to come in and take all of your property. It means that your property is protected by
the federal law and by, essentially, being in a federal bankruptcy estate, and that only
a bankruptcy judge can direct anyone to deal with property of that estate. So while that
is happening, you are safe. And you and your attorney can determine whether you want to
keep certain property, whether you want to give it back, and can of course determine
what you wish to do with your property. I’ve spoken briefly about the automatic stay. We
will talk in greater detail about it in future videos, but it is one of the primary and most
important laws in bankruptcy, and it has an immediate impact on every single case that
is filed. Thank you for your time. I wish if you would like to request books from us,
please go to our website, www.flexerlaw.com, or call our office. We will be happy to mail
you books on Chapter 13 and Chapter 7, which will help you make an informed decision.