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How Does The Automatic Stay Work

The Automatic Stay prevents anyone from interfering with the Bankruptcy Estate.

Once the case is filed the “automatic stay” is in place and┬ástops most collection actions against the debtor or the debtor’s property. Filing the petition does not stop certain types of actions, including but not limited to: criminal prosecutions, actions by governmental units to enforce their regulatory powers, actions to establish or modify domestic support obligations, actions to determine issues as to dissolution of a marriage, child custody or visitation, and paternity actions, and the interception of tax refunds to be applied to paternity obligations.

The automatic stay may also be limited if a prior bankruptcy case was dismissed within 1 year of the current filing.┬áThe automatic stay arises by operation of law and requires no judicial action – it’s automatic. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor and severe penalties may apply to anyone violating the automatic stay.