Legal Question in Bankruptcy in Indiana

Re: Automatic stay

Federal bankruptcy law requires that all creditors immediately discontinue any collection effort upon the filing of the bankruptcy petition. This is generally called the "automatic stay". Violations can be called to the attention of the bankruptcy court by a petition for contempt against the offending creditor. Unfortuntely, creditors are not generally aware of the filing at the time of filing and perhaps not for a few days later. If the address to which a creditor notice is sent has been supplied by the debtor as the address to which payments only are sent, there will be a further delay in the creditor realizing there is a bankruptcy filed. Hence, there are almost always violations of the automatic stay, but most are merely due to lack of knowledge on the part of the creditor. This "automatic stay" remains in effect during the bankruptcy proceeding and thereafter as to all discharged debts. A creditor who wishes to repossess or otherwise take an action to enforce a debt needs to file a petition with the bankruptcy court seeking permission to do so. Generally, this is not allowed except after notice to the debtor and a hearing (or without hearing if the debtor fails to respond to the notice). This is the main and primary protection a debtor has in bankruptcy.