The Automatic Stay of Code Section 362 immediately stops all creditor collection activity.
Is this protection unfair to creditors? Discuss your reasoning why or why not.
I do not feel this protection is unfair to creditors knowing there is a process and requirements a
debtor must abide by during the Automatic Stay. “According to statistics released by the
Administrative Office of the U.S. Courts, annual bankruptcy filings totaled 380, 634 in the year
ending June 2022, compared with 462,309 cases in the previous year.” These numbers are lower
than the previous year, however, knowing the economy has changed with the pandemic, there are
more and more people filing for bankruptcy, “legal proceedings initiated when a person or
business is unable to repay outstanding debts or obligations.”
With the automatic stay, once
chapter 7 or 13 is filed, the automatic stay goes into effect. The automatic stay protects
individuals who file for bankruptcy.
The automatic stay prevents creditors from collecting
money on your debts without filing a motion and getting permission from the bankruptcy judge,
including foreclosure. The biggest point why I agree with this process is the automatic stay
remains in place for the duration of your case if you make your monthly payments on time, and
by not doing so, you can lose the automatic stay. Lastly, the automatic stay ends when the case
ends or when the creditors receive permission from the bankruptcy judge to get relief from the
automatic stay to collect their debt.
It’s tough how some people who can pay their debts try and defeat the systems by filing
bankruptcy, however, knowing it’s not an easy process and there are requirements you must
abide by, not only gives the creditors grounds to stand on if debtors don’t follow those
requirements. It also gives the debtors time to see how their case will proceed and allow them to
get their documents and files together needed to be filed in the bankruptcy case without creditors
racing or leaving them under pressure concerning their debts.
