The Automatic Stay
When a debtor files for bankruptcy relief, something called the automatic stay immediately kicks into effect. The automatic stay prevents all creditors from undertaking any action to collect a debt from a debtor. Effectively, the automatic stay often prevents creditors from even contacting the debtor. If a creditor has filed a law suit against in order to collect unpaid debts, the lawsuit is stopped. If the bank has initiated foreclosure proceedings to take back your home, the foreclosure process comes to a halt. If creditors have been calling incessantly, those calls stop. If your wages have been garnished, the automatic stay stops garnishment proceedings.
The automatic stay is intended to provide debtors with a breathing spell from their creditors. It maintains the status quo at the time of filing so that the debtor’s financial affairs can be sorted out under the supervision of the bankruptcy court.
While the automatic stay is a necessary component of every bankruptcy proceeding, it is only temporary. Generally, the automatic stay is lifted when the court grants the debtor a discharge from his or her debts. Alternatively, a creditor may ask that the court lift the automatic stay with respect to the creditor’s specific debt.