What is the automatic stay in a bankruptcy case?

The automatic stay is a key feature of bankruptcy law that all states, including Washington, recognize. It is an immediate and automatic prohibition against creditors from taking certain actions to collect payment from a debtor after a bankruptcy case has been filed. This “automatic stay” applies to both secured and unsecured creditors and halts all collection activities, such as phone calls, wage garnishments, and foreclosure proceedings. The purpose of the automatic stay is to give the debtor a “breathing spell” from debt collection. This timeout period gives the debtor the opportunity to review his or her financial situation and develop a plan to reorganize his or her debts. It also gives the debtor the opportunity to work out a repayment plan with creditors, as well as determine eligibility for a discharge of some of their debts. When the bankruptcy case is filed, the debtor and creditor must provide the court with information about the debt and the debtor must provide a detailed schedule of assets and liabilities. This information and the automatic stay order will be presented to creditors, and all legal efforts to collect payment must cease during the process. The automatic stay also serves to prevent creditors from taking certain actions, such as filing lawsuits and continuing foreclosure proceedings, while the bankruptcy case is pending. This is especially helpful to debtors whose primary asset is their home or other real estate. It also prevents creditors from pursuing any type of creditor relief or bankruptcy relief without the approval of the court.

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What is the automatic stay in a bankruptcy case?

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