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3 Major Exceptions To The Automatic Stay In Bankruptcy

automatic stay bankruptcy exceptionsThe automatic stay in bankruptcy is a key provision you need to understand fully.  We know what the automatic stay does, and what it covers. But if you review the list of what is covered by the automatic stay, you’ll notice that the list is not all-encompassing.

That’s because not all actions are prevented.  Filing for bankruptcy alone doesn’t help you if what you’re looking to stop isn’t covered.

So what actions are never covered by the automatic stay in bankruptcy?

Criminal Actions:  If there’s a criminal action pending against you – anything from an indictment through trial and sentencing – that’s going to keep chugging along.  Every criminal action is covered here, from murder all the way down to jaywalking (though I’ve never seen anyone get arrested for that).

Family Issues:  If you’re involved in a divorce or family court proceeding, the automatic stay won’t apply.  Paternity cases, child or spousal support issues, and child custody or visitation matters are covered here.  Same thing goes for domestic violence and divorce actions.

And if you’ve got a wage garnishment for past due child or spousal support, that’s not going to stop in a Chapter 7 – for that, you’ll need to file a Chapter 13.  Your bank accounts can remain frozen, your tax refund can be seized, your driver’s license can be suspended – again, unless you go into Chapter 13.

Taxes:  The government is brutal.  If there’s an audit, it’s going to continue.  Tax liens will remain in place as well. Collection attempts, however, will stop.

If you’re thinking about filing for bankruptcy and have any of these types of problems, it’s best to talk with your lawyer.  Do it before the case is filed about how to deal with the issues that will continue.

Some actions that can’t be stopped in the context of your bankruptcy case may be solved in other ways, especially those involving tax matters.  But if you decide to file a case based on a false assumption then you’re just going to end up with the same problems later on.

Image credit: fabrisalvetti.

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By |October 26th, 2011|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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