The day a bankruptcy case is filed, federal law imposes an automatic stay that orders most creditors to stop collecting. For people working with a bankruptcy lawyer in Pittsburg, CA, that usually means collection calls, wage garnishments, new bank levies and pending repossessions must halt immediately, while a few kinds of debt and a few situations fall outside that protection.
If an account is frozen or a repossession is imminent, call (415) 754-0115 to schedule a free consultation, or explain what happened through our contact page.
What happens the moment a Pittsburg case is filed
The automatic stay comes from section 362 of the Bankruptcy Code. It does not need a hearing or a judge's signature. Filing the petition is enough. From that minute, creditors are generally barred from calling, suing, garnishing, levying, repossessing or foreclosing to collect a debt that arose before the filing.
Pittsburg cases are filed with the U.S. Bankruptcy Court for the Northern District of California and are generally assigned to its Oakland Division, which covers Contra Costa County. For a deeper look at the legal rule itself, see our explanation of the automatic stay in bankruptcy.
Collection calls and letters
For anyone in Pittsburg, Bay Point or elsewhere in East County who is behind on bills, the phone can become a constant reminder of debt. The stay ends that collection activity for pre-filing debts.
How creditors learn about the case
The court mails a notice of the filing to every creditor listed in the schedules. Because that can take some days, your lawyer can also contact the most aggressive creditors directly with the case number, so they stop immediately rather than when the court's notice arrives.
If a collector keeps calling
A creditor that knows about the case and keeps trying to collect may be violating the stay. Keeping a simple log of dates, times and what was said helps your lawyer decide whether to raise the issue with the creditor or with the court.
Frozen bank accounts and levies
A bank levy is one of the most disruptive things a judgment creditor can do, because it can leave a household unable to pay rent or buy groceries.
A levy still in process
In California, levied funds are typically held for a period before they are turned over to the levying officer and then to the creditor. A bankruptcy filed during that window can stop the process, and the funds may be protected by an exemption. Funds already paid to the creditor shortly before filing may sometimes be recovered, depending on the amount and timing.
Protecting the account going forward
California law protects a certain amount in a deposit account, and exempt sources such as Social Security benefits keep their protection when deposited. After filing, the stay prevents any new levy on pre-filing debts.
When you owe money to your own bank
If you have a credit card or loan with the same bank that holds your checking account, that bank may place a temporary hold on the account after filing while it asks the court for permission to set off the balance. Moving everyday banking to an institution where you owe nothing is something to discuss with your lawyer before filing.
Car loans and repossession
A car is often the one asset a Pittsburg household cannot do without, given commutes along Highway 4 and BART schedules that do not fit every shift.
Before the car is taken
Once the case is filed, the lender cannot repossess the vehicle without first getting permission from the bankruptcy court. That gives time to decide what to do with the loan.
If the car has already been repossessed
A vehicle taken shortly before filing may sometimes be recovered, especially in Chapter 13, though the lender can ask for proof of insurance and payments that protect its interest. Our article on how bankruptcy can stop car repossession goes through those scenarios.
Keeping the car over the long term
In Chapter 7, keeping a financed car usually means staying current and either reaffirming the loan or redeeming the vehicle. In Chapter 13, the loan can be paid through the plan, and in some cases the balance owed on an older loan can be reduced to the car's value.
What the automatic stay does not stop
The stay is broad, but not unlimited. It generally does not stop:
- collection of child support or alimony from wages or other property that is not part of the bankruptcy estate;
- criminal proceedings, even if they involve money;
- certain tax audits and the issuance of a tax assessment.
The stay can also be shorter or absent for people who had another case dismissed within the past year. In addition, any creditor can ask the court for relief from the stay, for example when a car or home loan is not being paid after filing.
Working with a bankruptcy lawyer in Pittsburg, CA
From its Pleasanton office, The Somal Law Firm handles Chapter 7 and Chapter 13 cases for individuals and small businesses throughout Contra Costa County, along with debt settlement and foreclosure defense. When collection is already underway, the job is to file correctly and then make sure the stay is enforced in practice, with the employer, the bank, the lender and any court where a case is pending. Our guide for a bankruptcy lawyer in Contra Costa County explains how the full process runs.
Frequently asked questions
How quickly can a bankruptcy case be filed?
It depends on how quickly the required documents and credit counseling can be completed. In urgent situations, a short initial petition can be filed with the rest of the schedules following within a set deadline.
Does the stay stop a wage garnishment?
Yes. Once the employer is notified, it must stop withholding for the creditor on a pre-filing debt.
Will filing unfreeze my account immediately?
Not always on the same day. The bank and the levying officer must be notified, and the exemption question may need to be resolved before funds are released.
Does the stay last for the whole case?
Generally, it lasts until the case is closed, dismissed or a discharge is granted or denied, unless the court lifts it sooner for a particular creditor.
If collectors, a levy or a repossession are causing a crisis, call (415) 754-0115 to set up a free consultation with The Somal Law Firm. You can also send details through our contact page, and we will get back to you about next steps.
Attorney Advertising. This article is general legal information for Bay Area residents, not legal advice, and does not create an attorney–client relationship. Every situation is different — please consult a licensed attorney about your specific circumstances.