Bankruptcy

Automatic Stay

The automatic stay is the injunction that takes effect the moment a bankruptcy petition is filed, stopping most collection activity against the debtor.

It halts lawsuits, foreclosures, repossessions, garnishments, and collection calls without anyone asking a judge, which is why the filing date matters so much. Actions taken in violation can be void and can expose the creditor to damages.

It is not absolute. Criminal proceedings, some domestic support obligations, and certain regulatory actions continue, and a creditor can move for relief from the stay to proceed against specific collateral.

Repeat filings weaken the protection. When a debtor has had prior cases dismissed within a year, the stay may expire after thirty days or not take effect at all unless the court extends it on motion. The stay also protects the estate rather than just the debtor, so it stops creditors from seizing property that belongs to the bankruptcy estate even when the target of the action is someone else.