The “Automatic Stay” in a Bankruptcy case is the law that stops creditors (and other parties) from trying to collect debts from a debtor, trying to get the debtor’s property or trying to create or enforce a lien on the debtor’s property. It is found in Section 362(a) of the Bankruptcy Code and essentially freezes the action and gives a debtor some breathing room. The Stay is, as the name implies, “automatic” and effective the instant a Bankruptcy Petition is filed, whether or not creditors have actual notice of the Bankruptcy filing. If a creditor violates the automatic stay, even innocently, the action is considered void and the creditor normally has an obligation to “undo” what they have done. The Automatic Stay is one of the most powerful benefits in a Bankruptcy case and is normally used to stop foreclosures of homes, repossession of vehicles and the garnishment of paychecks and bank accounts. In Georgia, the largest filing day of the month (by far) is the day before the monthly foreclosure sale day.
The automatic stay is temporary and expires when the case is closed or dismissed, the Chapter 7 debtor receives a discharge, the property at issue is no longer property of the Bankruptcy estate, or when the Court has lifted the Stay after a motion from the creditor (normally called motions for relief from the automatic stay). After a discharge is entered, the Automatic Stay is effectively replaced by the Discharge Injunction, which prevents efforts to collect discharged debts.
