In most circumstances, a Court Order that goes into effect when the bankruptcy is filed and prohibits most creditors from taking action to attempt to collect a debt from you or your property. If you file multiple bankruptcies, action to obtain the automatic stay may be required.
Power of the automatic stay
The automatic stay is very powerful. If the automatic stay goes into effect, the debtor and all property he owns or may have an interest in is protected from most creditors. In order to take action against the debtor or his property, a creditor may be required to seek Court permission. The automatic stay does not stop all legal proceedings. Certain actions, such as criminal proceedings and certain domestic support obligations are examples of actions not prohibited by the automatic stay.
Violations of the automatic stay
If a creditor violates the stay order, the Court can punish the creditor by awarding damages.
Stay limited for repeat filings
If a person has filed bankruptcy before, the stay may be limited. In most cases, a second bankruptcy case filed where a first bankruptcy was dismissed within the last year results in the automatic stay being effective for 30 days. The debtor must request the Court extend the stay by Court Order or it will expire in 30 days. If a debtor had two or more cases pending in the last year, the stay does not go into effect. The debtor must file a motion requesting that the stay be imposed.
Cross Stone Law is a bankruptcy law firm serving individuals and small businesses. Carol Cross Stone is a bankruptcy attorney who helps people and businesses file for bankruptcy. Carol has practiced law for over 35 years. She limits her practice to bankruptcy.
Under federal law, Cross Stone Law is a debt relief agency. We help individuals and business file for bankruptcy relief under the Bankruptcy Code.