What is the bankruptcy automatic stay?

The bankruptcy automatic stay is a legal protection that stops most collection activities, including but not limited to; lawsuits, foreclosures, garnishments, and collections. When someone files for bankruptcy in Virginia, the automatic stay comes into effect, and creditors must stop collection efforts until the bankruptcy is discharged. The stay is also designed to protect any property the debtor might have, as well as help them get a fresh start. The bankruptcy automatic stay is a powerful tool for debtors in Virginia because it gives them a break from their creditors and allows them the opportunity to resolve their financial affairs. Creditors are prohibited from taking any action against the debtor, such as contacting the debtor or even filing a lawsuit. The stay also prevents creditors from repossessing or garnishing the debtor’s assets or wages. Once the stay is in effect, debtors must continue to make payments on obligations such as mortgage or car loan payments, depending on the type of bankruptcy they have filed. It is important for debtors to understand that the stay does not provide them a free pass. The stay is designed to provide debtors with the time and opportunity to reorganize and manage their finances. If a debtor fails to take advantage of the stay, they may still be subject to collection efforts.

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What is the bankruptcy automatic stay?

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