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The Automatic Stay in Bankruptcy


What is this automatic stay business?

So, you are served with a bankruptcy filing from someone who owes you money. What is this Automatic Stay business? How does someone else’s bankruptcy apply to you?

The exact moment a debtor files bankruptcy, the Automatic Stay goes into effect. This means creditors cannot take any further action that would affect the assets or rights of the bankruptcy estate or the debtor. For example, a creditor cannot file a lawsuit against the debtor once the bankruptcy petition has been filed, nor can a creditor execute on a judgment that is obtained before the bankruptcy petition was filed. The premise behind bankruptcy is to stop collection and allow the debtor time to reorganize or liquidate their estate so that creditor claims can be paid.

The Automatic Stay is not permanent, however, and there are a number of ways a creditor may seek relief from the Automatic Stay. For more information, please contact Kathleen Muthig at or (803) 765-2935.

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