automatic stay

The bankruptcy stay stops all collection actions including court cases in which the debtor is being sued. If a bankruptcy debtor is a party to a state civil case where a judgment has been entered and the case is being appealed, does the bankruptcy stay stop the appeal? This question is the subject of a recent article in the Florida Bar Journal.

When a company is facing financial distress, the question often comes up whether creditors can "force" the company into bankruptcy. Although the answer is more complicated than it may seem, this post aims to sort out what being "forced into bankruptcy" really means (hint: there are two different ways this can happen) and why it matters to companies and creditors.

The Automatic Stay in Bankruptcy Those who find themselves struggling financially are often the unfortunate victims of creditor harassment and incessant phone calls. The calls can get so bad that families are often forced to leave their  phone off the hook at dinner time. By definition, bankruptcy involves waving the white flag in the face [...]

An opinion from San Antonio Bankruptcy Judge Leif Clark examines when a claim against a non-debtor can violate the automatic stay. The short answer is: when the creditor says he is doing it to collect from the debtor. The long answer requires an examination of the interplay between 11 U.S.C. Sec. 362(a)(1) and 362(b)(4). In re Reyes, No. 10-52366-C (Bankr. W.D. Tex. 4/20/11).

The Automatic Stay.

It is one of the greatest and most powerful provisions of the Bankruptcy Code. If sections of the Bankruptcy Code were literary characters, the Automatic Stay would be a superhero.

The Automatic Stay comes from section 362 of the Bankruptcy Code. Section 362 provides that the commencement of a bankruptcy case stays pretty much any action that creditors can take against a debtor or the debtor’s property.

So, actions to collect a debt? Stopped.

Wage garnishments? Stopped.