In the last installment of the series, I went through some of the terms that Associations need to know when a Unit Owner files for Bankruptcy. This edition will talk about the “Automatic Stay” and how it affects Creditors like an Association. The first thing to remember is that Bankruptcy is a way to allow people who have debts to get a fresh start. The Automatic Stay gives Debtors some cooling off time. It is a period where Debtors do not have to worry about anyone trying to collect against them.
How Does an Automatic Stay Limit Collections?
When someone files for Bankruptcy, they automatically get protected by an Automatic Stay. Basically, the Automatic Stay stops all actions against the Debtor. The Automatic Stay prohibits anyone from starting or continuing any kind of legal action against a Debtor that does any of the following:
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