What is the Automatic Stay in Bankruptcy?

The automatic stay is provided for in section 362 of the U.S. Bankruptcy Code. The automatic stay is a legal protection in bankruptcy that automatically stops most collection actions against the debtor or the debtor’s property as soon as the bankruptcy petition is filed. The purpose of the automatic stay is to give the debtor a breathing spell from their creditors and to allow the debtor to reorganize their finances under the protection of the bankruptcy court. The stay is automatic and usually goes into effect immediately upon filing the bankruptcy petition. The stay typically lasts throughout the entire bankruptcy case and can only be lifted by the court for cause.