The automatic stay is a legal protection that is triggered automatically when an individual or a business files for bankruptcy. The automatic stay immediately stops most collection actions, including:
- Foreclosure proceedings: The automatic stay stops the mortgage company from foreclosing on your home while the bankruptcy case is pending.
- Repossession proceedings: The automatic stay stops a lender from repossessing your car or other property while the bankruptcy case is pending.
- Wage garnishments: The automatic stay stops wage garnishments, which are deductions from your paycheck to repay debts.
- Collection calls and letters: The automatic stay stops debt collectors from making harassing phone calls and sending collection letters.
- Lawsuits: The automatic stay stops any lawsuits that have been filed against you by creditors.
The automatic stay is a powerful tool that gives individuals and businesses in bankruptcy a breathing spell from their creditors while they work to resolve their financial difficulties. However, it’s important to note that the automatic stay is not permanent, and in some cases, a creditor may be able to get permission from the bankruptcy court to resume collection activities. Additionally, some debts, such as child support, student loans, and criminal fines, are not affected by the automatic stay.