Automatic Stay

Last Updated: Jun 6, 2019

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An automatic stay is the process during bankruptcy proceedings in which actions undertaken by a creditor to recover their outstanding debts from the company in question are put on hold. The stay occurs immediately after chapter 7 or 11 bankruptcy is filed by the debtor in bankruptcy court, and allows for the orderly resolution of the bankruptcy process without ongoing collection-related conflict occurring outside of the courts. During the course of the stay, creditors are prohibited from continuing legal proceedings against the debtor, seizing the debtor's assets, enforcing any preexisting liens, or offsetting debts via other means.