What is the automatic stay in bankruptcy?

The automatic stay is a court order that takes effect immediately when you file bankruptcy. It stops most collection actions, lawsuits, foreclosures, repossessions, wage garnishments, and creditor harassment. It remains in effect until the case is closed or the debt is discharged.

Can a creditor violate the automatic stay?

Creditors who violate the automatic stay can be held in contempt of court. You may recover actual damages, attorney fees, and in some cases punitive damages. Common violations include continued collection calls, repossessing property, or proceeding with a lawsuit after notice of the filing.

How long does the automatic stay last?

The stay lasts until the bankruptcy case is closed, dismissed, or the debtor receives a discharge. If you filed a previous case that was dismissed within the past year, the stay may only last 30 days unless you file a motion to extend it.

Does the automatic stay stop eviction?

The stay temporarily stops most evictions, but landlords can request relief from stay. If the landlord already obtained a judgment for possession before you filed, the stay may not apply at all. The protection is limited and temporary in most eviction situations.

What should I know before filing bankruptcy?

Bankruptcy is a legal process that can eliminate or restructure debts, but it has lasting effects on your credit and financial life. Before filing, understand which debts can be discharged, what property you can keep through exemptions, and which chapter fits your situation.

The Co-Debtor Stay

Section 1301 protection for co-signers in Chapter 13

Three Grounds for Relief

Section 1301(c) allows creditors to seek relief on three grounds: (1) the codebtor received the consideration, (2) the plan does not propose to pay the claim, (3) the creditor would be irreparably harmed.

The creditor must file a motion. The court holds a hearing within 20 days. The burden of proof is on the creditor.

Protecting Against Relief

The best defense is a plan that pays the codebtor claim in full. If the plan provides 100% payment, the creditor has no basis for relief.

Even if the plan pays less than 100%, you can argue that modification is possible or that the codebtor did not receive the consideration.

Learn more about Chapter 13 plans

Chapter 13 Plan Guide

Related Guides

Section 362 Automatic Stay

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Related Resources

The Automatic Stay - How Section 362 stops creditor collection the moment you file

Chapter 13 Plans - How Chapter 13 repayment plans work and get confirmed

Relief from Stay - When and how creditors can lift the automatic stay