The Automatic Stay: What Are the Exceptions?

When your bankruptcy attorney files the petition on your behalf, an automatic stay goes into effect to prevent your creditors from contacting you, pursuing a civil lawsuit, or taking any other adverse actions against you. However, there are a few exceptions to the automatic stay. Certain actions will proceed regardless of your bankruptcy case. These include virtually all divorce-related proceedings, including child support collections actions, paternity lawsuits, alimony collections, and child custody arrangements.

Be sure to let your bankruptcy lawyer know if you have tax debt or a pension plan. The automatic stay will not prevent wage garnishment for the purpose of repaying a loan taken out against an ERISA-qualified pension. The automatic stay also does not prevent the IRS from performing a tax audit, issuing deficiency notices, or demanding payment.

Despite these exceptions, an automatic stay can help many debtors stop adverse actions against them.