Please Make It Stop: How Bankruptcy’s Automatic Stay Can Keep (Most) Debt Collectors at Bay

If you are overwhelmed by debt that you simply can’t keep up with, your creditors and debt collectors won’t let you forget it. The calls, the letters, the harassment and constant threats of garnishments, lawsuits, foreclosures, or evictions become a constant presence in your life. You just want it to stop.

The filing of a bankruptcy petition can do that. It marks the end, at least temporarily, of the almost daily reminders of the dire consequences of your current financial situation.

When a bankruptcy petition is filed, an “automatic stay” goes into effect at that very moment. The automatic stay applies to a broad classification of actions against a debtor and is in effect a “time-out” that can allow you, your attorney, the court, and creditors to develop the plans to move forward.

What the Automatic Stay Stops

Under the Bankruptcy Code, most creditors are forbidden at that point from committing any act that constitutes an attempt to collect on a debt. This includes:

  • phone calls and letters from debt collectors and creditor;
  • foreclosures;
  • repossessions and seizures of property;
  • set-offs of funds;
  • perfection of liens;
  • garnishments;
  • civil collection lawsuits.

Exceptions to the Stay

Not all creditors are barred by an automatic stay from continuing in their efforts to collect amounts owed from the debtor. For example, these will not be stopped:

  • certain tax proceedings
  • actions for collecting for past-due child-support
  • actions for collecting criminal penalties
  • eviction proceedings if the landlord has already obtained a judgment for occupancy of the premises prior to a tenant’s bankruptcy filing.

Otherwise, every creditor that you owe money to is barred from trying to collect it while the automatic stay is in place.

Lifting the Stay

Once the automatic stay is in place, creditors who are now thwarted in their efforts to collect from you can ask the bankruptcy court to lift the stay for their particular debt, allowing them to proceed with their efforts to secure payment.  You and your lawyers will receive notice of a creditor’s request to lift the stay and have an opportunity to oppose the request.

As with all aspects of bankruptcy law, the rules regarding how and when the automatic stay is applied and how it may be lifted will to a very large degree depend on the specifics of your situation. You should always consult with an experienced bankruptcy lawyer to determine whether filing for bankruptcy and availing yourself of the powerful tool that is the automatic stay is the right course of action for you.

The Law Offices of Louis R. Fine

If you are facing a mountain of debt that you can’t pay, I can help. I assist clients facing extreme financial challenges and put them on a path to a fresh start and a brighter future. When you meet with me, we will examine your financial situation, discuss your options and determine the most appropriate course of action. Please give me a call at (312) 236-2433 or fill out my online form for a free initial consultation.

Who Should Pay for U? – College Costs After Divorce

Overjoyed or crushed? For high school seniors across the country at this time of year, acceptance or rejection letters from the colleges they wish to attend are determining which of those emotions they feel upon opening their mail. For parents of those seniors, the pride they feel about their child’s acceptance is likely accompanied by confusion and anxiety about the financial aid process and how they will help pay for four (or more) years of tuition that seems to increase at an exponential rate every year.

For divorced parents, a child heading off to college also means the end of child support and with it the question of who is going to foot the bill for their child’s college expenses. In Illinois, college costs are referred to as “post-majority expenses” and the question of who pays them depends on several factors.

Look to Your Judgment of Dissolution First

First, check your judgment of dissolution. If your marital settlement agreement, which divided all your property and set forth provisions regarding child custody and support, addressed post-majority expenses, they will be incorporated into the court’s final judgment. Illinois law gives family law courts the right to require one or both parents to pay a child’s higher education costs, even after the child graduates high school and turns 18.

The Illinois Marriage and Dissolution of Marriage Act

If your marital settlement agreement says nothing about college costs, and the judgment of dissolution is also silent on the issue, all hope is not lost. In Illinois, either parent can petition the court for college expenses, both before and after a child becomes a legal adult. More importantly, it doesn’t matter if your marital settlement agreement or final divorce decree failed to address the issue of post-majority expenses.

Section 513 of the Illinois Marriage and Dissolution of Marriage Act allows both moms and dads to ask the court to order the other parent to contribute to “the educational expenses of the child or children of the parties, whether of minor or majority age.” Such an application for educational expenses “may be made before or after the child has attained majority” and any order for the payment of college expenses terminates when the child receives a baccalaureate degree,” so no order will include the costs of graduate school.

In the majority of cases, the parent with the higher income is required to pay a larger percentage of the expenses, although courts occasionally order the child to kick in a portion of the bill.

Act Quickly to Receive the Support You Need

Too often, parents delay filing a petition for post-majority expenses until college fees are upon them. If you wait until your child is packing up for the first day of school, you could get stuck with the bill for the first semester.

If you have questions or concerns regarding your child’s college costs after a divorce, please give me a call at (312) 236-2433 or fill out my online form to arrange for a consultation.