When it comes to filing bankruptcy, so many laws, rules and regulations have to be considered that many individuals simply become overwhelmed.

Adding to the stress is the battle of warding off creditor phone calls, threats, lawsuits, and insults that making sound intelligent financial decisions suddenly becomes fraught with overwhelming emotion, and a gloomy or angry frustration quickly sets in, after all, enough is enough. Wouldn’t you agree?

Fortunately, there is a provision within the Bankruptcy law, that helps immensely, termed the “Automatic Stay”. In U.S. bankruptcy law, an automatic stay is an automatic injunction that halts the actions of your creditors, with certain exceptions, to collect debts from you. Under section § 362 of the United States Bankruptcy Code, 11 U.S.C. § 362, the automatic stay begins the moment your bankruptcy petition is filed with the Federal Bankruptcy Court.

Upon filing, creditor notices are immediately sent out from the court ordering them to cease any further collection activity, at least until the bankruptcy case has been resolved, or until further order(s) of the court.

In the past, the courts have recognized just how devastating it can be when there are non-stop phone calls, letters and even creditors banging on the doors. Thereby, creating an impossible environment for any debtor to properly and intelligently deal with his or her financial woes.

With few exceptions, an automatic stay will normally stop the following types of actions:

1. Foreclosures
2. Utility disconnections
3. Garnishments
4. Third party collections – collection companies
5. Credit Card collections
6. Divorce proceedings
7. Repossessions
8. Evictions
9. Lawsuits

And / or, any other type of action against the you that could affect your  financial estate adversely.

This protection goes so far as to put a stop to ongoing judgments that are already in effect. For example, if a debtor has been undergoing a wage garnishment then the creditor responsible for this action must stop the garnishment. In short, every financial action against the debtor, no matter what stage it may be at, must come to a halt.

Another great benefit about the “Automatic Stay” is just that…its automatic. This means that an individual who is already under financial stress does not have to specifically petition the courts, creditor by creditor, for any type of ruling to initiate an “Automatic Stay”.   And, there is no need for a judge to authorize the stay or even hold any type of initial hearing.

Notably, a creditor may motion the court for relief from an automatic stay.  In particular, mortgage companies do this quite often during a Chapter 7 proceeding, and when foreclosure proceedings are imminent, and the debtor has indicated that he/she has not intention of trying to keep the real property.