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What is Automatic Stay?

Upon the filing of a Bankruptcy, a stay arises which usually prohibits all debt collection efforts against the debtor or property of his Bankruptcy Estate. The automatic stay does not stop the collection of post petition debts against the debtor.

The Bankruptcy Court does not usually have to sign an Order to enact the automatic stay. The mere filing of the Bankruptcy petition with the clerk is enough to create the automatic stay. There are some exceptions to this rule, in particular, Debtors who file successive Chapter 13 Bankruptcies.

Section 362 of the Bankruptcy Code governs the automatic stay. Bankruptcy Code Section 362(a) states that the automatic stay stops most legal actions, brought or could have been brought, before the filing of the Bankruptcy petition. The automatic stay also stops the enforcement of a Judgment against the debtor, any act to obtain property of the Debtor, any act to perfect or enforce a lien, any right to setoff against the debtor, and any effort to collect a tax liability against the debtor.

Bankruptcy Code Section 362(b) contains the exceptions to the automatic stay. The automatic stay does not stop a criminal action against a debtor, nor does it end an action for the establishment of paternity, for the establishment of domestic support obligations, or divorce or domestic violence proceedings. There are many other exceptions to the automatic stay, but these are the more common exceptions contained in the Bankruptcy Code.

To learn more about automatic stay in bankruptcy, contact the bankruptcy experts at Jay Weller for a consultation today.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_column_text][vfb id=3][/vc_column_text][/vc_column][/vc_row]