//The Automatic Stay

The Automatic Stay — What is it and how does it work?

The Automatic stay is a legal term used when a consumer files for bankruptcy protection. It is a stay, which means any collection attempts by a creditor, law suits, or garnishments must stop when a bankruptcy is filed. This provides the relief needed from most collection efforts, and it goes into effect immediately when a bankruptcy petition is filed, and stays in place until the completion of the bankruptcy (discharge or dismissal). The automatic stay is granted for both Chapter 7 and Chapter 13 bankruptcy filings.

the automatic stay If you are experiencing harassment by creditors, the automatic stay can be beneficial. To suspend collection activities against you, the automatic stay will go into effect as soon as you file bankruptcy. The automatic stay is an injunction that helps you by suspending collection attempts as you reorganize your debt or restore your finances. 

When an attorney files a bankruptcy petition, a list of creditors is also filed. Each creditor is notified of the automatic stay by the bankruptcy court. Filing bankruptcy may be in your best interest if you require immediate action to stop a foreclosure, wage garnishment, or repossession, as the automatic stay is granted.

There are certain collection actions that the automatic stay will not stop. Child support, divorce proceedings, criminal restitution, or tax debt, for instance, may not be stopped under the automatic stay. Contact our Mesa bankruptcy law firm and speak to an attorney about your particular situation to determine if the automatic stay would be beneficial for your particular debt situation.

The automatic stay is powerful. It is used to stop creditors from taking property that is exempt under bankruptcy law or that belongs to the bankruptcy estate. Creditors may  ask the judge to remove the automatic stay.