What is the automatic stay? When is it effective?
The automatic stay protects the debtor from their creditors. It requires all collection efforts, any harassment, and all foreclosure actions be immediately stopped by creditors when the case is filed. It permits the debtor to attempt a repayment plan or simply to be relieved of the financial pressures that drove them into bankruptcy. The automatic stay also protects creditors. Without it, certain creditors would be able to pursue their own remedies against the debtor s property. Those who acted first would obtain payment of the claims thus, making it impossible for other creditors to collect anything. Bankruptcy is designed to provide an orderly liquidation procedure under which all creditors with equal rights are treated equally. Parties who violate the automatic stay can, under certain circumstances, be held liable for damages and may be held in contempt of court.
