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Automatic stay |
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Automatic stay The restricting of liability holders from collection efforts related to collateral seizure. Automatically imposed when a firm files for bankruptcy under Chapter 11. Automatic Stay In bankruptcy, an injunction against any ongoing collection process by any creditor. That is, all creditors must stop current attempts to collect debts during the bankruptcy proceedings. Chapter 13 bankruptcy also protects co-debtors who may not have filed bankruptcy. The automatic stay prevents creditors from filing lawsuits, making collection calls, or repossessing or foreclosing on property until the debts are discharged (or not) or the bankruptcy judge lifts the stay. American bankruptcy law limits the automatic stay for second-time filers to 30 days, and does not grant automatic stays for third and subsequent filings. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| On the commencement of a bankruptcy action, an automatic stay arises by operation of law. Because the automatic stay and injunctive powers accrue upon the insurer entering receivership, such option should be exercisable upon a pre-receivership event, such as a significant rating downgrade or suspension, a predetermined inadequacy of the insurer's risk-based capital, a predetermined ratio of the insurer's loss and loss adjustment expense reserves, or other action falling short of receivership. Any relief obtained may be reduced as a result of the new limitations on the automatic stay and failure to maintain financial reporting compliance by debtors will lead to dismissal of their case, a loss of debt relief and termination of the automatic stay. |
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