The Safety of the Automatic Stay

Automatic Stay Keeps You and Your Property Safe From Creditor

The “automatic stay” goes into effect as soon as a debtor files for bankruptcy, and protects the debtor and the debtor’s property from all actions against the debtor or property, when the action’s purpose is to collect a debt.  The automatic stay prevents and ceases,

• any judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the filing of the bankruptcy petition, or to recover a claim against the debtor that arose before filing;
• the enforcement of a judgment obtained before filing against the debtor or against property of the debtor;
• any act to obtain possession or to exercise control over property of the debtor;
• any act to create, perfect, or enforce any lien against property of the debtor;
• any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before filing;
• any act to collect, assess, or recover a claim against the debtor that arose before filing;
• the setoff of any debt owing to the debtor that arose before filing; and
• the filing or continuation of a proceeding before the United States Tax Court concerning a tax liability of a debtor who is an individual for a taxable period ending before the date of the order for relief.

After the stay is in effect, any action against the debtor or property of the debtor can only be made through or with the permission of the bankruptcy court.  If a creditor violates the stay, they may suffer penalties including actual damages and punitive damages.