How does the automatic stay work?

Once you file your bankruptcy petition, the court issues the automatic stay. As the name suggests, it happens right away as soon as the court gets your paperwork.

U.S. News and World Report explains the automatic stay puts a pause on all your debts. It serves an important purpose within the bankruptcy process to protect you as you go through the legal steps.

A pause

When the stay goes into effect, your creditors must cease all activities. If you have collections, they cannot contact you or try to continue collecting the debt. If you have a court case for a collection, that also will go on hold. Creditors cannot contact you at all or make you pay your debt. They also cannot continue any actions against you, such as repossessions or filing court cases.

Exceptions

There are exceptions to the automatic stay. These are generally debts that the bankruptcy will not impact, such as child or spousal support obligations. It also does not impact other obligations.

Your requirements

There is nothing you need to do to get the automatic stay. It is part of the bankruptcy process. The stay allows the court to consider your financial situation without a bunch of changes occurring. It essentially freezes things, making it easier for the court to do its job.

Ending the stay

The stay lifts when the court dismisses or discharges your case. Once the stay lifts, creditors with remaining debts not discharged in the bankruptcy can resume collection activities. So, if you have debts not excused in the process, you can expect them to begin seeking payment or taking other actions once the stay lifts.