Exceptions to the Automatic Stay under the Bankruptcy Laws
When you file for protection under Chapter 7 or Chapter 13, the automatic stay under the Bankruptcy Code immediately goes into effect, prohibiting your creditors from calling, writing or taking other legal action to collect a debt from you. There are, however, specific types of legal actions that will not be affected by the stay.
Tax Actions
The Internal Revenue Service, as well as state tax authorities, can still take certain actions, such as demanding payment of an assessment, requiring a tax return, conducting a tax audit or issuing a deficiency notice.
Family Law Obligations
Generally, child support and spousal support/alimony arrearages are not affected by a bankruptcy filing, and state enforcement agencies are not prohibited from collection efforts. Accordingly, if you have a child support or spousal maintenance deficiency, the collecting agency may engage in a wide range of actions in an effort to collect the amount past due, including:
- Withhold money through your employer to pay current and past due child support
- Attach any refunds from state or federal revenue agencies
- Report your overdue support obligations to a credit reporting agency
The filing of a bankruptcy petition will have no impact on your obligation to pay ongoing support, or on custody or visitation determinations. The court may also modify your support order.
Pension Loans
If you borrowed money from a 401(k) or other company retirement plan, the imposition of the automatic stay won’t prohibit your employer from deducting an amount from your paycheck to repay the loan.
Contact John Hargrave and Associates
We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.
