What is an automatic stay in bankruptcy?
When a debtor files for bankruptcy, an automatic stay is granted under 11 U.S.C.S. § 362 to prevent the creditors from seeking any recourse for collection of debts against the default debtor. The automatic stay prevents foreclosures and repossessions. Newly enacted law provides for lifting of the automatic stay as to secured or leased property within 30 days after the filing of a bankruptcy petition if the debtor was dismissed from a previous bankruptcy case within one year of the filing of the existing case and automatic stay shall be lifted where individual debtor has had two or more prior bankruptcy filings dismissed within the preceding year.
