What Is an Automatic Stay In Bankruptcy?

An Automatic Stay in Bankruptcy is a federal court order that provides debtors with protection from their creditors. It halts creditor attempts to collect debts or take any other action against the debtor, including garnishing wages or foreclosing on a home. The purpose of an Automatic Stay is to give debtors time and breathing room to evaluate their financial situation and develop a plan for repaying what they owe in an orderly fashion.

The Automatic Stay is available as soon as the petition for bankruptcy has been filed, including Chapter 7 and Chapter 13 bankruptcies, both of which are types of consumer bankruptcies. An Automatic Stay may also be available in some corporate cases, depending on the type of bankruptcy being pursued. In most cases, it will remain in effect until the case has been resolved by either dismissal or discharge, unless it is modified or lifted early by the court.

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