Which Debt Collections are Not Halted by the Automatic Stay?

When you file for bankruptcy, an automatic stay goes into effect. This is a legal order to prohibit your creditors from continuing their collection attempts while you focus on working through the bankruptcy process. Do not assume that the automatic stay means that you are no longer liable for your debts or that your creditors cannot resume their collection attempts. Certain debts are not affected by the automatic stay, and in some cases, creditors for debts that are affected can file for relief from the automatic stay.

The automatic stay is one of many new concepts and terms you will face with your bankruptcy case. Your lawyer can discuss each of these concepts in detail with you to help you understand what you are facing and how you can successfully navigate the bankruptcy process.

Collections of Child and Spousal Support Debt are Not Halted

If you owe money to a former partner for spousal or child support, you must continue to make these payments. These payments are meant to provide for your former partner or child and you cannot stop providing for them simply because you have filed for bankruptcy. If you cannot afford these payments, seek a modification of your court order, rather than allowing yourself to become delinquent and accruing more and more debt. These debts are known as priority debts. They cannot be discharged through bankruptcy.

Tax Audits are Not Halted

To verify that your claims about your income and deductions are accurate, the Internal Revenue Service (IRS) may conduct a tax audit. If you are subject to a tax audit, the audit will continue despite you filing for bankruptcy. It may result in the IRS proposing changes to your tax return, which you can accept or challenge, or it can result in the IRS’ satisfaction with your explanation for the discrepancies in your return, in which case you do not need to do anything.

Other Proceedings May Also Continue

Certain non-collection proceedings, like lawsuits, are also halted by an automatic stay. Others are not. If you are facing a criminal proceeding, it will continue even when your automatic stay goes into effect. If you are facing a criminal charge or any other legal proceeding, discuss it with your lawyer before you file for bankruptcy to determine how, if at all, the bankruptcy will affect that proceeding and vice versa. Actions to establish paternity may also continue, as can divorce proceedings, evictions, proceedings to establish child support or parenting time, and collection of debts accrued after you filed for bankruptcy.

Work with an Experienced Elk Grove Bankruptcy Lawyer

If you are considering filing for bankruptcy, do not file alone. Instead, work with an experienced bankruptcy lawyer who can act as your advocate through each stage of the bankruptcy process. To get started, contact our team at Newland & Newland, LLP to set up your initial consultation with a member of our firm. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.

(image courtesy of Bethany Legg)

  • Newland & Newland LLP, Attorneys, Arlington Heights, IL
  • Lawyer.com