The bankruptcy automatic stay is one of the first protections offered to those who file for bankruptcy. In most situations, the automatic stay takes effect as soon as the initial paperwork in a bankruptcy case has been filed. It is automatic which means that no other documents have to filed or orders obtained. The notice of the bankruptcy filing is all that is provided to creditors. It protects debtors from all forms of collection: wage garnishments, bank levies, foreclosures and continuation of lawsuits. It applies in all chapters of bankruptcy; chapter 7, chapter 11, and chapter 13.
Under bankruptcy law, an automatic stay is an automatic injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy. Under section 362 of the United States Bankruptcy Code, the stay begins at the moment the bankruptcy petition is filed.
The stay exists until the earlier of case closure or the discharge being entered. The purpose of the automatic stay is to allow people to reorganize their debts and get a discharge.