Will the Bankruptcy Automatic Stay Hold in San Bernardino Valley?

March 26, 2013 4:54 pm Published by

The moment you file bankruptcy in Indiana,, an order goes out from the bankruptcy court to all your creditors, telling them to leave you alone! In almost all cases, they can't call. They can't send letters, They can't file lawsuits, They can't foreclose, They can't repossess, You become "off limits" for all your creditors. The legal term for this blessed relief is the bankruptcy "automatic stay".

As every good Indiana bankruptcy attorney explains to clients, creditors must stay away while the automatic stay is in force. A recent news article about San Bernardino County in California is raising a challenge to that rule.  At the Mark Zuckerberg bankruptcy law offices, where we offer only Indiana bankruptcy help, we are nonetheless very, very interested in how things develop there in California

Two of San Bernardino County's two biggest creditors are

  • the California Public Employees' Retirement System, which claims that $5 million in pension payments were not made by the country.
  • The landfill service that is in charge of dumping the county's waste.

According to a ctp.cteenprint.net editorial, "What we have in California is a bunch of public agencies battling over revenues no longer sufficient to support them all." The agencies have filed a court motion to ask for a reversal of the bankruptcy automatic stay that is preventing all lawsuits against the city until after the bankruptcy case has been decided.

Having been a debt consolidation lawyer and having practiced Indiana bankruptcy law for more than 26 years, I've got just one syllable to say to those creditors – Duh! (You oughta know that the automatic stay was put in force for a reason.)  Now, don't get me wrong. Even under the new bankruptcy laws of Indiana, creditors are given a chance to convince the courts that their debt should be excluded from the bankruptcy. But that doesn't mean they don't have to observe the Automatic Stay rules.

It's natural for creditors such as the landfill company to try to collect the money they're owed; it's obvious no business can survive very long without getting paid for its products or services. The flip side of the situation, though, is that debtors need protection from extraordinary harassment and disturbance of their lives. In the case of San Bernadino County, the debtor is very much in need of the opportunity to figure out some kind of plan.

In fact, the automatic stay was designed to ensure that the moment you file personal or business bankruptcy, the automatic stay notice prevents creditors from harassing you. But, in order for the automatic stay to go into effect, it all comes back to the Bankruptcy in Indiana
message I keep repeating, urging people to seek legal help at the earliest signs of financial trouble.


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