What is the automatic stay in bankruptcy?
Full Question:
Answer:
The automatic stay is one of the most valuable functions of a bankruptcy proceeding for the debtor seeking relief from creditors. The automatic stay immediately stops any lawsuit filed against you and virtually all actions against your property by a creditor, collection agency or government entity and provides an injunction against the continuance of any action by any creditor against the debtor or the debtor's property.
The automatic stay prohibits:
The automatic stay remains in effect until:
beginning or continuing law suits
Collection calls
Repossessions
Foreclosure sales
Garnishment or levies
A judge lifts the stay at the request of a creditor;
The debtor gets a discharge; or
The item of property is no longer property of the estate.
Essentially, an automatic stay means that upon filing the petition for bankruptcy, all creditors, including the IRS, collection agents and attorneys, etc, are restrained from trying to collect their debts, repossess property, or foreclose.
Simply put, they cannot send you insulting or threatening collection letters, call you on the phone, sue, garnish your wages, repossess a car, foreclose on your home, or do any other act to collect on the debt. Anyone who willfully violates the stay in the case of an individual is liable for actual damages caused by the violation and sometimes for punitive damages.
