automatic stay

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.

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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.

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automatic stay

A bankruptcy provision that stops all creditor actions,including foreclosures,immediately upon a debtor's filing for bankruptcy protection. There is then a breathing period during which no creditor action may take place.Afterward,a creditor may ask the court for permission to proceed,called a request to lift the automatic stay.To be successful,it must prove that neither the debtor, nor any other creditors,will be prejudiced if foreclosure or repossession is allowed to continue.