What is the bankruptcy automatic stay?

The bankruptcy automatic stay is a legal protection that stops most collection actions and other attempts to collect a debt against a person who has filed for bankruptcy. In Wisconsin, the automatic stay is activated as soon as a bankruptcy petition is filed, giving the debtor a period of time to reorganize his or her debts. During the stay, creditors cannot take any action to collect the debt or take possession of the debtor’s property, such as garnishing wages or filing a lawsuit. The automatic stay remains in effect until the bankruptcy court grants a Motion for Relief from the Stay, or until the completion of the bankruptcy process. During the stay, the debtor must continue to make any payments and provide any other information that is necessary to the court. Additionally, the automatic stay may be extended if the debtor’s filing of bankruptcy is challenged or dismissed. The purpose of the automatic stay is to protect a debtor’s assets and to provide a period of time to renegotiate debts or develop a plan to reorganize existing debts, such as through a Chapter 13 bankruptcy. Without the automatic stay, creditors could take action to collect the debt before the debtor even had the chance to reorganize or come up with a plan to pay off the debt.

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What is the bankruptcy automatic stay?

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