What Is the "Automatic Stay" In Bankruptcy? by Kathleen Munden


The fiing of a bankruptcy petition acts as an immediate stay of any act against the debtor to collect a debt. It is called an “automatic stay” because no action, other than the filing of the petition, is necessary in order for the stay to go into effect. Although there are many exceptions to the automatic stay, creditors generally are forbidden from contacting the debtor to demand payment, filing a lawsuit to obtain a judgment on a debt, filing a lien against the debtor’s property if a judgment has already been obtained, or seizing property of the debtor to satisfy a debt.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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