Understanding the Automatic Stay

by Johnny Tisdale on February 25, 2013


What is the automatic stay?

The automatic stay is a court order that prevents creditors from taking collection actions against you. From the debtor’s perspective, it’s one of the best things about the bankruptcy system. You’ll experience immediate relief from the stress associated with those dreaded phone calls and letters.

How long does the automatic stay last?

The automatic stay lasts as long as the bankruptcy case lasts. It begins as soon as the petition is filed and ends when the case is concluded. Then the automatic stay is replaced with a permanent injunction that prevents creditors from ever trying to collect on the debts that have been discharged.

Are there any exceptions?

As with most things in the legal world, the automatic stay is not without its exceptions. These exceptions are listed in §362 of the Bankruptcy Code. To name a few, the automatic stay does not apply to:

  • A criminal proceeding against the debtor
  • A civil action or proceeding
  • The collection of domestic support obligations
  • The withholding, suspension, or restriction of a driver’s license
  • The interception of a tax refund
  • The enforcement of a medical obligation

If you’re not sure whether any of your creditors are excluded from the automatic stay, you should ask your local bankruptcy attorney.

Is there any other way that a creditor can bypass the automatic stay?

Even if not exempted from the automatic stay by one of the exceptions listed above, a creditor can file a “motion for relief from stay.” If this motion is granted, then the court will “lift” or remove the automatic stay for that creditor. Generally, the court will only do this when the automatic stay has an unintended consequence for a creditor. For example, suppose that you stop making current mortgage payments after your bankruptcy petition is filed. The court might lift the stay for your mortgage lender because the stay is only intended to prevent collection actions for debts from before the petition was filed.

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Johnny Tisdale

Paralegal at Dowe Law Firm
Johnny Tisdale is a paralegal, web designer, and writer at the Dowe Law Firm. He earned his BS in psychology and ABA-approved paralegal certificate from Auburn University Montgomery in 2011.

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