What is the Automatic Stay?
At the moment a bankruptcy petition is filed, your creditors are automatically restrained from taking any action to collect the debts owed them. There are some exceptions, for example, a bankruptcy petition does not stay the commencement or continuation of a criminal action, an action to collect spousal support, or an action to enforce a government’s police or regulatory power.
Bankruptcy Code 362 imposes an automatic stay the moment a bankruptcy petition is filed. The automatic stay generally prohibits the commencement or enforcement of actions, judicial or administrative, against a debtor for the collection of a claim that arose prior to the commencement of the case. The stay also prohibits collection actions aimed at property of the estate itself.
THE AUTOMATIC STAY IS THE COURT ORDER THAT STOPS CREDITORS IMMEDIATELY, even if they don’t yet know you filed bankruptcy. The automatic stay is one of the most powerful tools you as the debtor get when you file your bankruptcy petition. It happens automatically upon the filing of your case either Chapter 7 or Chapter 13. It is so powerful that it can stop a foreclosure, a car repossession a utility shut-off and even a wage garnishment. I have even had the repo man return a car that he took from my client because a bankruptcy had been filed even though the repo man did not know. Most creditors who are regularly in the business of lending money know and respect the power of the automatic stay in bankruptcy and will abide by the law. The automatic stay is an automatic injunction against most continued collection activities. The automatic stay goes into effect as soon as your bankruptcy case is filed with the bankruptcy court. The automatic stay is important because it protects you from co
When you file a bankruptcy petition, your creditors are automatically barred from taking any action to collect the debts owed them or seizing your property. The relevant statute, 11 U.S.C. sec. 362, does provide some exceptions. For example, a bankruptcy petition does not stay the commencement or continuation of a criminal action (unless brought to collect a debt), an action to collect alimony, maintenance or support from certain assets or income, or an action to enforce a government’s police or regulatory power. In some states, an action taken in violation of the automatic stay is void. In other states it is voidable and the debtor must obtain a court order undoing the action.
This is an injunction that goes into effect automatically upon the filing of a bankruptcy case in Colorado. It strictly prohibits the commencement or continuation of any acts to collect on a debt that arose prior to filing the bankruptcy. Think of the automatic stay as a court ordered time out against your creditors. This includes enforcement of judgments, creating or perfecting liens, and many other actions under Colorado Law. (It does not apply to collecting alimony maintenance and support). If any creditor violates this Colorado Bankruptcy Court Ordered, they could be held in contempt and then your creditors could be liable to pay you sanctions.
