What is a “stay” or “automatic stay” and what does it do?
A “stay” is a legal restriction on creditors which imposes a wide range of prohibitions on their attempts to
foreclose, repossess, collect and/or harass you. The purpose of the stay is to ensure a fresh start for the person filing for bankruptcy and ensure an evenhanded management of the creditors involved.
The stay is often referred to as “automatic” because the act of filing a bankruptcy petition is all that is needed to bring it in to effect. No extra paper work is required and no court action is required. However, there are some actions are not stayed.
The automatic stay is governed by the language of
11 U.S.C. 362 (link may be outdated)
What is stayed?
- Foreclosure
- Garnishment
- Wage Garnishment
- Ongoing Litigation (Lawsuits and Court based collections)
- Debt Collection Attempts (Creditor calls, etc.)
- Any New Litigation to Collect
Well then what is not stayed?
Typically, things that are NOT stayed are:
- Actions of creditors against co-debtors under Chapters 7 and 11
- Criminal actions
- Collection of alimony, maintenance, and support from property not part of estate
- Proceedings that seeks establishment of paternity
- Certain governmental actions or proceedings
- Acts of creditors to maintain or continue perfection of an interest in property
People overwhelmed and being suffocated by creditors are allowed to breathe from the automatic stay. It is important to contact
a bankruptcy attorney to properly file all the necessary documents and ensure that your bankruptcy is a success.
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