Bankruptcy Stay Brings Relief from Collection Actions

13 Feb Bankruptcy Stay Brings Relief from Collection Actions

A centerpiece of the bankruptcy code is the automatic stay, an injunction that is issued automatically and instantly when a debtor files a petition for bankruptcy relief. It prohibits anyone from taking any action to collect a debt, continue a lawsuit, impose a lien or take possession of the debtor’s property.

The court gives notice to all the entities listed in the debtor’s bankruptcy schedules of the filing of the case and the terms of the stay. Any action a creditor takes after the stay is in effect is either void or voidable.

The automatic stay lasts, in most cases, until the debtor gets a discharge; the asset is no longer “property of the estate”; or the court lifts the stay at the request of a party. It provides a breathing space for the debtor to reorganize his financial life, free of the harrassment of his creditors.

Upon the entry of the debtor’s discharge, the automatic stay is replaced, as to dischargeable debts, by the discharge injunction, which is permanent.

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Cathy Moran, Esq.

I'm a certified specialist in bankruptcy law (California State Bar Board of Legal Specialization) practicing in the San Francisco Bay Area for more than 30 years. In addition to practicing bankruptcy law, I train new practitioners at Bankruptcy Mastery.
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