Better Understanding the Automatic Stay in Maine Bankruptcy Law

English: Part of Title 11 of the United States...

English: Part of Title 11 of the United States Code (the Bankruptcy Code) on a shelf at a law library in San Francisco. (Photo credit: Wikipedia)

If you are filing a Chapter 7 under Maine bankruptcy law, how the courts view and enforce the automatic stay becomes more important because of the limitations on your personal exemptions. The automatic stay of bankruptcy is mostly the same regardless of which state you have to file bankruptcy, but all bankruptcy courts have a certain amount of leeway to interpret and enforce the bankruptcy laws to fit each case.

Testimony in a Maine Bankruptcy Law Case Requiring the Use of the Automatic Stay

Debtors wanting to file a Maine bankruptcy law case, a married couple, recently blogged on a bankruptcy forum website their need to file a joint Chapter 7 bankruptcy, and they had questions about their exemptions. One of the couple wrote in: “In Maine we are allowed a $400 wild card. Filing jointly, we’ll have a total of $800. Since Maine offers no protection for wages or money in the bank I presume we’ll have to use that to cover cash to survive on. What I don’t understand is, while we are getting payed after filing, do I somehow have to keep my bank account to $800 or less?”

Filing for bankruptcy protection falls under federal bankruptcy laws. Once a filer files for federal protection, all collection activity by creditors must immediately cease. Once the creditors have been notified that you are filing for bankruptcy, they are not allowed by federal bankruptcy laws to have any direct contact you to ask you about your debt.

Under certain circumstances, you may discuss a secured debt with the creditor if they are willing to do so. You, as a filing debtor, are not required to discuss any type of debt once you have filed. It is sometimes to your advantage to discuss your situation on secured debts if you are intending to keep the assets.

In most states, unless you have a clause relating to a cross collateral when you make a loan at your bank, bank accounts are normally protected by the automatic stay of bankruptcy. Many credit unions have cross collateral types of clauses when you sign up for an account. That simply means they can use the money in any of your accounts to satisfy a loan they have given you if you default on their loan. They will seize the money in another account to satisfy the debt you owe them. They can usually legally do this without having to take you through civil court proceedings to accomplish the goal, and they don’t have to contact you to seize the account since it is within their institution.

Maine Bankruptcy Law and  Your Bank Account

Maine bankruptcy law does not have laws to protect your banking accounts from cross collateral operations.  Nevertheless, once Maine banks have been notified that you are filing for bankruptcy protection, and the bank does not have an agreement with you for cross collateral proceedings, technically, they must abide by the automatic stay if they are aware of the bankruptcy. Unfortunately, a gray area can occur in proving exactly when a bank obtains the knowledge of a bankruptcy filing and the stay is in effect.

If you are in doubt about filing bankruptcy, and like the married couple in the illustration, you are worried about your bank accounts in Maine, you need to consult with a Maine bankruptcy lawyer that can provide you with legal advice and be your advocate in such special cases.

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