Understanding Bankruptcy
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What Is Automatic Stay in Bankruptcy?

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Content was accurate at the time of publication.

When you file for bankruptcy, an automatic stay temporarily grants you some breathing room from creditor pressure.

Thanks to a provision under United States bankruptcy law, an automatic stay immediately goes into effect from the moment your bankruptcy motion is filed. This can protect you from eviction, foreclosure, wage garnishment or similar financial disruptions until the stay is lifted.

There are some exceptions, such as if you filed for bankruptcy more than once within a certain time frame. Still, this provision can be a boon for getting yourself back on your feet financially as you resolve your debts.

Read on to learn how an automatic stay can protect you during bankruptcy.

What is an automatic stay in bankruptcy?

A court issues an automatic stay of bankruptcy as soon as you file the motion, preventing creditors from collecting on debts you owe during the legal proceedings. In many cases, the stay begins from the moment you file, regardless of the type of bankruptcy, and will continue until your bankruptcy case is closed or something else occurs to disrupt the provision.

There are several types of bankruptcy motions in which an automatic stay may apply. For instance, Chapter 7 bankruptcy allows debtors to liquidate some or all of their assets to pay off debts. Chapter 13 bankruptcy, on the other hand, requires debtors to repay some or all of their debts based on their expected earnings over three to five years, but it allows them to keep their assets.

How long does the stay last?

An automatic stay triggered by bankruptcy won’t stay in place forever. It ends when the case is closed or your debts are discharged — meaning your debts are forgiven. You may have a shorter automatic stay if you’ve filed for bankruptcy more than once.

In many cases of Chapter 7 bankruptcy, your debt will be discharged by the time the case is closed, as your assets are sold off to repay your debt. Because of the duration of the court case, a Chapter 7 automatic stay often lasts for three to four months.

In contrast, the automatic stay remains effective on Chapter 13 bankruptcy cases throughout the duration of the debtor’s repayment plan, assuming they comply with the terms. After the repayment period (up to five years), the remaining balance will be discharged and the automatic stay will expire.

What can an automatic stay prevent?

When you file for bankruptcy, here are some of the main forms of creditor relief you can expect from your automatic stay.

Utility disconnections

Under Section 366 of the U.S. legal code, a utility provider that offers an essential service, such as water or electricity, cannot terminate your service for a minimum of 20 days after you file for bankruptcy and your automatic stay goes into effect.


Once your automatic stay is in place, any foreclosure proceedings on your home will be halted. The eventual outcome will depend on the type of bankruptcy you declared.

In the case of Chapter 7 bankruptcy, the pause on your foreclosure will only be temporary since filing will not protect you from losing your home. If you file for Chapter 13 bankruptcy, the automatic stay can buy you enough time to catch up on your past-due mortgage payments, as long as you don’t fall further behind.


Eviction timelines vary by state. An automatic stay can prevent you from being evicted if your landlord filed for eviction prior to your bankruptcy filing but hasn’t yet gotten an eviction judgment from the housing court.

While an automatic stay might buy you some time, the landlord may not necessarily allow you to remain on the property while the stay is in place. If you haven’t caught up on past-due payments or continue to miss ongoing rent payments, the landlord can ask the bankruptcy court to evict you.

Wage garnishment

Wage garnishment rules also vary by state, but they allow portions of your wages to be deducted from your paycheck to pay back your debt. When you file for Chapter 13 bankruptcy, the automatic stay puts a stop to most wage garnishments. Your creditor can no longer collect that debt, so you can keep your full salary.

If you owe taxes, the IRS can’t garnish your wages while the bankruptcy case is open. However, a Chapter 7 filing does not exempt you from continued payments on domestic support obligations, such as past-due child support or alimony.

Harassment from creditors

As soon as you file for bankruptcy and the automatic stay goes into effect, your creditors cannot contact or harass you. The Fair Debt Collection Practices Act (FDCPA) law has established rules for what creditors can and cannot do when collecting debts. Here are some tips on stopping debt collectors from calling you.

Which debts are exempt from an automatic stay?

Not all debts will be exempt from collections after you file for bankruptcy. These are some common areas of financial responsibility that you’ll still be responsible for paying.

Evictions with judgments

In most states, you can still be subject to eviction if your landlord successfully filed and won an eviction judgment or judgment of possession against you before you filed for bankruptcy and established automatic stay protection.

Domestic support

With both Chapter 7 and Chapter 13 bankruptcy filings, you still need to pay certain types of family law obligations, including child support, even if you have an automatic stay in place.

Criminal proceedings

Criminal prosecutions are not protected by the automatic stay if the underlying basis for the prosecution was separate from the debt collection efforts.

For example, if you were convicted for writing a bad check and sentenced to community service or ordered to pay a fine, you will still have to serve the sentence or pay the fine without protection from the automatic stay. However, if a creditor reported you to the local district attorney for prosecution in order to collect your debt on the check, then their action would violate the automatic stay.

Pension loans

If you borrowed from your 401(k) plan or another equivalent retirement account prior to declaring bankruptcy, the loan payments are treated differently depending on the type of bankruptcy you file.

If you declared a Chapter 13 bankruptcy, you may have to take money from your income to repay the loan. But if you’re in a Chapter 7 bankruptcy, the loan then becomes a distribution, and you have to pay taxes to the IRS if you stop making the payments because there’s no provision in the bankruptcy code to repay that 401(k) loan.

Can creditors avoid the automatic stay?

If a creditor believes they have the right to collect on your debts, they can ask the court for permission to collect. They’ll have to provide a legitimate reason for why they should be allowed to enforce the debt. If the court grants them relief from the stay, the creditor can continue collections against you. A common example can be when a landlord moves to continue evicting a tenant whose lease fully expired before bankruptcy was filed and an automatic stay went into effect.

What happens if a creditor violates an automatic stay?

If a creditor knowingly violates an automatic stay in bankruptcy, there can be heavy financial repercussions for them. They may be required to cover any damages caused by their actions, such as any costs and attorney fees you incur, as well as punitive damages in some cases.

If you continue to receive threats for collection after your automatic stay is in place, you can file a motion with the court for violation of the automatic stay. The judge can grant sanctions against the creditors, which vary depending on how egregious the violation is.