Answer:
The automatic stay is a crucial feature of bankruptcy that protects debtors from creditors. When a bankruptcy petition is filed, the automatic stay immediately halts lawsuits and most actions against the debtor's property by creditors, collection agencies, or government entities. This includes prohibiting:
- New or ongoing lawsuits
- Collection calls
- Repossessions
- Foreclosure sales
- Wage garnishments or levies
The automatic stay remains in effect until:
- A judge lifts the stay at a creditor's request
- The debtor receives a discharge
- The property is no longer part of the bankruptcy estate
In essence, once bankruptcy is filed, all creditors—including the IRS, collection agents, and attorneys—are barred from attempting to collect their debts, repossess property, or foreclose. This means they cannot send threatening letters, call you, sue, garnish wages, repossess vehicles, or take any other action to collect on debts. If a creditor willfully violates the stay, they may be liable for actual damages and sometimes punitive damages.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.