The stay doesn’t put a stop to every type of collection action, nor does it apply in every situation. Congress has determined that certain debts or proceedings are sufficiently important to “trump” the automatic stay. In these, collection actions can continue just as if you had never filed for bankruptcy.
In addition to the specific types of collection actions that can continue despite the stay, there are circumstances in which you can lose the protection of the stay through your own actions. These are described below as well.
(To learn more about the automatic stay, see our Bankruptcy's Automatic Stay area.)
Actions Not Stopped by the Stay
The automatic stay does not prohibit the following types of actions from proceeding.
Divorce and Child Support
Almost all proceedings related to divorce or parenting continue unaffected by the automatic stay. These include actions to:
- set and collect current child support and alimony
- collect back child support and alimony from property that is not in the bankruptcy estate (to learn more about what is and is not in the bankruptcy estate, see Property in Your Bankruptcy Estate)
- determine child custody and visitation
- establish paternity in a lawsuit
- modify child support and alimony
- protect a spouse or child from domestic violence
- withhold income to collect child support
- report overdue support to credit bureaus
- intercept tax refunds to pay back child support, and
- withhold, suspend, or restrict drivers’ and professional licenses as leverage to collect child support.
The IRS can continue certain actions, such as conducting a tax audit, issuing a tax deficiency notice, demanding a tax return, issuing a tax assessment, or demanding payment of an assessment.
The stay doesn’t prevent withholding from a debtor’s income to repay a loan from an ERISA-qualified pension (this includes most job-related pensions and individual retirement plans).
How You Can Lose the Protection of the Stay
Even in circumstances where the stay would otherwise apply, you can lose its protection through your own actions. The stay may not protect you from collection efforts if:
- you had a bankruptcy case pending within the year before you file your current case, and the court refuses your request to allow the stay to kick in, or
- you don’t meet the deadlines set out in the bankruptcy code for dealing with property that serves as collateral for a secured debt.
Exceptions to the Automatic Stay for Evictions
In many cases, the automatic stay will stop a pending eviction. However, there are two exceptions:
- Your landlord got a judgment for possession before you filed for bankruptcy. In some states, however, you might be able to have the stay reinstated if the judgment was for failure to pay rent.
- The landlord is evicting you for endangering the property or the illegal use of controlled substances on the property.
To learn more about how the automatic stay affects evictions, including the exceptions, see Evictions and the Automatic Stay in Bankruptcy.