As soon as a debtor files, all actions by all creditors must stop dead in their tracks.  This includes foreclosures, evictions, repossessions, collections, garnishments, lawsuits and harassing phone calls.  In other words, a debtor’s creditors are “stayed” from further enforcement of its rights.  For example, if you file bankruptcy 30 minutes before a scheduled foreclosure, the foreclosure must stop.  If you file bankruptcy after your employer receives a notice to garnish your wages, the garnishments must stop.  If you file for bankruptcy before receiving a judgment in an eviction action (called a “forcible detainer”), the eviction must stop.

Any creditor who continues any type of collection action prior to the debtor’s discharge may be subject to sanctions. As such, creditors need to make sure they have internal processes to avoid accidental collection efforts.

Is the automatic stay effective during the entire bankruptcy?

A creditor may file a motion with the court to “lift the automatic stay”.  This is a motion to get permission from the court to allow the creditor to proceed with enforcing its rights.  For example, it is not uncommon for a mortgage lender to file such a motion so it may proceed with an inevitable foreclosure.