If your phone is ringing off the hook due to harassing collection calls or if you’re facing foreclosure or repossession, you may find relief through bankruptcy.

When a person files bankruptcy, the bankruptcy automatic stay goes into affect and it can silence creditors, stop foreclosure, halt repossession and prevent other collection efforts.

What is the Bankruptcy Automatic Stay?

After a person files bankruptcy, an order called the automatic stay is issued by the bankruptcy court.

This automatic stay prohibits creditors from contacting you and stops most legal actions associated with your debts. 

This means the creditors must stop calling and foreclosure efforts and lawsuits must be stopped in their tracks. 

The automatic stay can specifically prohibit collection calls, repossession, foreclosure, wage garnishment, levies, debt-related lawsuits and utility shutoffs.

Who Get’s the Protection of the Automatic Stay?

It doesn’t matter if you file Chapter 7 bankruptcy or Chapter 13 bankruptcy, the automatic stay is issued in most types of bankruptcy cases, with few exceptions. 

And, if you file Chapter 13 bankruptcy, the automatic stay may even apply to co-debtors!

The changes to the U.S. Bankruptcy Code in 2005 brought about some limitations to the length of the automatic stay for some people who have previously filed bankruptcy. 

So, if a debtor has filed bankruptcy within the past year and the case was dismissed, the automatic stay is usually only active for 30 days. 

Debtors who have filed bankruptcy two times or more in the past year are not entitled to an automatic stay; however, those debtors may request a special stay from the court.

How Long Does the Automatic Stay Last?

The automatic stay remains in effect until the bankruptcy is discharged, the judge lifts the stay or the property in question is no longer part of the debtor's estate. 

In some cases, the automatic stay may be lifted at the request of a creditor, but this is a unique event.

When the bankruptcy is discharged, the automatic stay is replaced with a permanent injunction that prohibits creditors from taking action to collect debts that were listed on the bankruptcy petition.

What Can't The Automatic Stay Do?

Keep in mind, the bankruptcy automatic stay does not protect debtors from criminal proceedings, collection of child support, tax audits or demands for unfiled tax returns.