Automatic Stay

If a petition is filed under Chapter 7, Chapter 11 or Chapter 13 Bankruptcy Section 362(a) of the Bankruptcy Code, it initiates an automatic stay which is basically an injunction against creditors to cease any activities which advance the interest of the creditor against the debtor. An automatic stay provides the debtor protection against the creditor's efforts at foreclosure, collection calls, repossessions, garnishments or levies, starting or continuing lawsuits, and harassment or any other collection efforts. An automatic stay also allows the debtor to establish a plan of reorganization or repayment. Exceptions to an automatic stay do exist (Bankr. Code 362(b)) and should be discussed with a bankruptcy lawyer. An automatic stay occurs as soon as the Bankruptcy Petition is filed and does not require a bankruptcy hearing. The automatic stay will remain in effect until the debtor gets a discharge, the judge removes the stay at the request of the debtor or the property is not part of the debtor's estate.

An automatic stay may only provide temporary relief for the debtor. Under Chapter 7 Bankruptcy the stay may stop immediate foreclosure for certain types of debts secured by real estate, but after 45 days a creditor collecting debt for secured by property can request that the court remove the automatic stay and allow the foreclosure to proceed. An automatic stay continues in effect for the duration of the Chapter 13 bankruptcy process allowing the debtor to restructure their debt payments with a debt repayment plan. An automatic stay may not stop collection of all debt payments including family support actions, criminal actions and tax collection actions.