1. Bankruptcy debtors have the right to automatic protection stay protection from their creditors unless they have done something that would cause them to lose the automatic stay protection such as committing fraud.
2. Bankruptcy debtors have the right to challenge creditor claims which they believe are fraudulent or inaccurate.
3. Bankruptcy debtors have the right to fair treatment from the bankruptcy trustee and bankruptcy court.  If it is found that a bankruptcy trustee or judge is unable to be impartial in the debtor’s case or if there is a conflict of interest, the bankruptcy debtor has the right to request that the trustee or judge is removed from their case if they can prove that the trustee/judge is being unfair.
4. Bankruptcy debtors have the right to protect their assets from creditors using the bankruptcy exemptions allowed by the law.  However, the bankruptcy trustee is now required to “educate” the debtor about these exemptions which is why it is important that the debtor is working with a competent and knowledgeable bankruptcy attorney.
5. Bankruptcy debtors have the right to receive a full disclosure of fees and costs associated with hiring their bankruptcy attorney.  Also, they have the right to know to what extent the bankruptcy attorney will represent them in their case.  Some debtors make the mistake of using online bankruptcy filing services which actually do not include a bankruptcy attorney representation.  Because of the possibility of adversary proceedings and other complications in the bankruptcy case, having a bankruptcy attorney available to represent them in court is important.

Amendments to the Bankruptcy Code in 2005 placed limits on the duration of the automatic stay for those who are repeat filers: debtors with a prior case pending in the last year that was dismissed get a stay of 30 days; debtors with two or more cases pending in the past year but dismissed get no stay at all.  In these situations, the automatic stay isn’t automatic at all–the debtor must request a stay from the court in order to get that protection.

The following acts are prohibited under the automatic stay:

* Beginning or continuing law suits;

* Collection calls;

* Repossessions;

* Foreclosure sales; and

* Garnishment or levies;

The automatic stay will remain in effect until:

* A judge lifts the stay at the request of a creditor;

* The debtor gets a discharge; or

* The item of property is no longer property of the estate.

Once the debtor’s bankruptcy is discharged, the automatic stay is replaced by a permanent injunction prohibiting creditors from all of those actions relating to discharged pre-petition debts that the automatic stay previously prohibited.

The automatic stay is not a “get out of jail free” card and will not stop the following:

* Criminal proceedings;

* Actions for a family support order or the modification of such order; or

* Actions to collect support from property that is not property of the estate

* Tax audit, demand for tax returns or assessment of tax (actual collection of tax is still stayed).

Those who willfully violate the stay can be held liable for actual damages caused by the violation and sometimes for punitive damages.  Courts can confine the right to damages to individual debtors and deny damages for stay violations as to corporate debtors in certain cases.  Since courts typically take several days or even weeks to mail creditors notice of the bankruptcy, the debtor or debtor’s counsel absolutely should give actual notice of the automatic stay to creditors to make sure they do not take any actions in the meantime.   Most creditor actions taken after the stay is in place are considered void or voidable, meaning any action the creditor takes in violation of the stay will have no legal effect on the debtor.

Since bankruptcy is such a complex proceeding, consumers may wish to consider consulting an experienced bankruptcy lawyer in order to discuss the ins and outs of bankruptcy protection and the automatic stay as pertains to their specific cases.