The Automatic Bankruptcy Stay

When a bankruptcy is filed, an automatic stay goes into effect pursuant to 11 U.S.C. Section 362.  The automatic stay is an injunction that prevents all actions by creditors including continuing lawsuits, garnishing wages and demanding payment.  The automatic stay begins the moment a bankruptcy is filed.  The automatic stay will generally end when debts are discharged or a case is close; however, the automatic stay may end sooner depending on circumstances.  

In some cases, creditors may seek an early termination of the automatic stay.  Most commonly, this is done by secured creditors who wish to foreclose on or repossess the secured property.  

A creditor who takes collection action in violation of the automatic stay can be liable for damages.