The Automatic Stay

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What is the automatic stay? And how it benefits a debtor filing bankruptcy.

The automatic is a type of injunction that emerges by operation of law upon the filing of a bankruptcy petition. Once the petition for bankruptcy is filed the automatic stay "automatically" goes into effect. The Code provided in §362(a) enforces a wide-ranged prohibition on all activities outside the bankruptcy court of creditors trying to collect or enforce prepetition debts. Certain activities are exempt under §362(b). And §362(c) determines when the automatic stays terminated, this depends on the type of case filed. Although creditors are generally prohibited from continuing to collect or enforce the prevention debts owed, 6362(d) offers parties the ability to petition the court to lift the stay. Lifting the stay can occur to a creditor not having "adequate protection" which is a topic unto itself. Ultimately, in a general sense once a debtor has filed a bankruptcy petition creditor and debt collectors must back off until the bankruptcy process is concluded.

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