Bankruptcy basics
The automatic stay
The automatic stay is the federal law that stops most creditor collection the moment a bankruptcy case is filed. It applies in Chapter 7 and in Chapter 13.
What it does
What the automatic stay does
The stay and the discharge are the two main reasons people file bankruptcy.
It stops collection against you and your property
Collection means any act by a creditor to collect a debt, not only calls and letters. Garnishments, lawsuits, repossessions and foreclosures stop when the case is filed.
In Chapter 13 the stay reaches further. It can protect a co-signer who does not file with you, and it lasts through the years of the plan.
It ends the race to the courthouse
Without a bankruptcy case, the first creditor to get a judgment or record a lien is first in line for your money and property.
With the stay, every creditor goes through one case, in one court, under the Bankruptcy Code.
It starts whether or not a creditor knows
The stay takes effect the moment the case is filed, even in the middle of the night, whether or not a creditor has heard about it.
A collection step taken in violation of the stay can generally be undone, and the bankruptcy court may sanction a creditor that violates it intentionally.
The exceptions
What the automatic stay may not stop
Family court matters
Child support and alimony may still be set, changed and withheld from income.
Custody and visitation matters may continue.
Other proceedings
- Criminal proceedings.
- An eviction by the sheriff after a landlord has an eviction judgment.
- A tax audit or a tax assessment.
Earlier cases
When the automatic stay does not start, or ends early
Usually the stay lasts until the discharge or until the case is dismissed. An earlier case or a creditor's request can change that.
Two or more cases dismissed in the last 12 months
No stay goes into effect.
We can ask the judge to impose one, after serving the creditors and showing the new case was filed in good faith.
One case dismissed in the last 12 months
The stay ends 30 days after filing, even though the case stays open.
We can ask the judge to extend it by showing good faith, and the judge must rule before the 30 days are up.
A creditor asks the judge to lift the stay
The request covers one debt. If the judge agrees, that creditor can collect outside the bankruptcy court.
Two reasons are common. In Chapter 7, you are behind and have no equity in the house or car that secures the loan. Or there is cause, such as a financed car with no insurance or a case filed only to delay.
You dismiss your own case after that request
You may be barred from filing another case for 180 days.
Tell me about every earlier bankruptcy case before we file.
The other bankruptcy basics pages
Call before the court date or the sale date, not after
Where you are in the collection sequence changes what filing can undo. The earlier you call, the more room we have.
Consumer cases start with a free consultation by phone, Zoom or in person, with a consultation agreement signed first. If you leave a message, please leave only your name and number.
This page is general information, not advice about your case.