For me, the keystone or centerpiece of all of the interacting parts of the Bankruptcy Code is the automatic stay. The stay is the fundamental shield available to our clients who file for relief from creditors in a Chapter 7 or Chapter 13 case and shields you and your assets from any collection activity by your creditors. The stay arises automatically simply by the filing of your bankruptcy petition and it continues until it is "modified" or "lifted" (terminated) by your Bankruptcy Judge, or your case is dismissed or until you receive your discharge and your "fresh start".
It acts like a temporary restraining order to stop or stay any ongoing or future collection activity by a creditor such as harassing telephone calls or any other unwanted creditor contact and stops lawsuits, garnishment of your wages or bank accounts, any tax levy, or a repossession or foreclosure. In a Chapter 13 case, your cosigner also can be protected by the stay.
Unlike exemptions, which are another important shield available in bankruptcy to protect your assets, the stay can be both a shield and a sword. For example, if an individual is harmed by a willful violation of the stay by a creditor, the law provides for the recovery of actual damages, and attorneys' fees and, under some circumstances, punitive damages. Also, the sword component of the stay is especially helpful in obtaining a "turnover" back to you of money garnished by a creditor or a vehicle repossessed by a creditor prior to or after the bankruptcy petition is filed. Remember: When you consult with an attorney, your role is to fully disclose what is going on in your financial life. The role of the attorney you select to represent you is to identify the stay relief applicable to your particular case.
Stay tuned for Part II.