The automatic stay: what stops the moment they file

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The same material, read aloud and told more loosely than it is written. Nothing is said in it that this page does not also say.

What stops

Filing operates, by itself, as a stay of the acts Section 362(a) lists, and it binds all entities. 11 U.S.C. 362¹ says so in the opening words of the subsection.

Your lawsuit stops. So does the one you were about to file. 11 U.S.C. 362(a)(1) stays the commencement or continuation of any action against the debtor, including the issuance of process, on a claim that arose before the case. And enforcing a judgment you already won stops too: 11 U.S.C. 362(a)(2) stays enforcing a pre-filing judgment against the debtor or against property of the estate.

That lien you were about to record stops cold. Any act to create, perfect or enforce a lien against estate property is stayed under 11 U.S.C. 362(a)(4), and 11 U.S.C. 362(a)(5) does the same for a lien against the debtor's property to the extent it secures a pre-filing claim. In Florida the stay reaches recording a certified copy in the county's official records or judgment lien record, which is the act Fla. Stat. 55.10² makes a lien out of, provided the judgment states the lienholder's address or an affidavit stating it is recorded at the same time. Freeze the act and the lien does not form.

Three more go quiet at once. Any act to collect a pre-filing claim is stayed under 11 U.S.C. 362(a)(6). Reaching for estate property, or exercising control over it, is stayed under 362(a)(3). And the bank that was going to set a pre-filing debt owed to the debtor off against what the debtor owes it cannot: 11 U.S.C. 362(a)(7) stays the setoff.

One class of act survives on a technicality worth knowing. An entity with neither actual notice nor actual knowledge of the case that, in good faith, pays a debt owed to the debtor or transfers estate property to someone other than the trustee is treated, as to itself, as if the case had never begun. 11 U.S.C. 542(c)³ protects that payer. But the money is not safe where it landed: under 11 U.S.C. 549(a)⁴ the trustee may still avoid a post-filing transfer that was authorized only by that good-faith rule, or not authorized at all.

One remedy is written by name. An individual injured by a willful violation of the stay recovers actual damages, including costs and attorneys' fees, and in appropriate circumstances punitive damages, under 11 U.S.C. 362(k)(1). What becomes of an act taken by a creditor who had not yet heard about the filing is a different question, and the statute does not answer it. This page will not guess at it either.

What does not

Section 362(b) lists acts the stay does not touch, and most of them are not the creditor's to use. A few bear directly on timing and on repeat filers.

Criminal cases run on. 11 U.S.C. 362(b)(1) excepts the commencement or continuation of a criminal action against the debtor. Most of the family docket runs on too: under 11 U.S.C. 362(b)(2)(A), proceedings to establish paternity, to establish or modify domestic support, about custody or visitation, for divorce (except where the proceeding divides estate property), and about domestic violence are all outside the stay. Support can still be collected from property that is not estate property under 11 U.S.C. 362(b)(2)(B), and income can still be withheld for a support obligation under an order or statute under 11 U.S.C. 362(b)(2)(C).

A government acting as a government is not frozen. Under 11 U.S.C. 362(b)(4), a governmental unit enforcing its police and regulatory power, including enforcing a judgment other than a money judgment, is excepted from the stays in 362(a)(1), (2), (3) and (6). And a narrow perfection window stays open: 11 U.S.C. 362(b)(3) lets an act to perfect or continue perfection stand to the extent 546(b) subjects the trustee's powers to it, or the act falls within the relation-back period in 547(e)(2)(A), which runs 30 days. This is the one place the stay bends for a creditor who was already racing a clock.

Repeat filing weakens the stay or removes it. Say an individual had a case pending in the year before the new one and it was dismissed, other than a case refiled under a non-chapter-7 chapter after a dismissal under 707(b). Then the stay as to the debtor on a debt, on the property securing it, or on a lease ends on the 30th day after the new filing, under 11 U.S.C. 362(c)(3)(A), unless the court extends it on a showing of good faith before those 30 days run. Worse for the debtor, if 2 or more cases were pending and dismissed in the prior year, with the same carve-out for a case refiled under a non-chapter-7 chapter after a 707(b) dismissal, 11 U.S.C. 362(c)(4)(A) says the stay does not go into effect at all, and on request the court must promptly confirm that none is in place.

Every stay ends, and knowing when is half the work. The stay of acts against estate property lasts until the property leaves the estate, under 11 U.S.C. 362(c)(1). As for other acts, 11 U.S.C. 362(c)(2) ends the stay at the earliest of the case closing, the case being dismissed, or, in an individual's chapter 7 case or a chapter 9, 11, 12 or 13 case, a discharge being granted or denied. A lien's own clock is a separate matter and state law governs it. Michigan is blunt about one piece of this: MCL 600.2809⁵ says a judgment debtor's state or federal insolvency filing does not toll or suspend the period a judgment lien stays effective. Where nonbankruptcy law fixes a period for commencing or continuing a civil action on a claim against the debtor and that period has not run by the petition date, 11 U.S.C. 108(c)⁶ holds the period open until the later of its own end or 30 days after notice that the stay has terminated. Whether a given step, such as renewing a judgment lien, counts as commencing or continuing a civil action under that section is the piece the statute leaves to case law, and this page stops at the statute's own terms. Whether the discharge later wipes out a lien that was on the record before the filing is the subject of whether judgment liens survive bankruptcy.

Relief from stay

The stay is not permanent and it is not unconditional. A party in interest can ask the court to lift it, on grounds the statute names and under a clock the statute sets.

On request, after notice and a hearing, the court shall grant relief from the stay by terminating, annulling, modifying or conditioning it, under 11 U.S.C. 362(d). Its grounds are listed. One is cause, including the lack of adequate protection of the requesting party's interest in property, under 362(d)(1). For an act against property there is a second: under 11 U.S.C. 362(d)(2), relief follows where the debtor has no equity in the property and the property is not necessary to an effective reorganization.

A creditor secured by real property has a third ground aimed at abuse. Under 11 U.S.C. 362(d)(4), the court may lift the stay on a finding that the petition was part of a scheme to delay, hinder or defraud creditors involving either a transfer of an interest in the property without the secured creditor's consent or court approval, or multiple filings affecting it. Such an order has teeth across cases. Recorded as state law provides for notices of liens on real property, it binds any other bankruptcy case affecting that property filed within 2 years, under 11 U.S.C. 362(d), though a debtor in a later case may move for relief from it for changed circumstances or good cause after notice and a hearing. Any federal, state or local governmental unit that accepts notices of liens on real property must accept a certified copy for indexing and recording.

A clock cuts both ways here. Thirty days after a request for relief from the stay of an act against estate property, the stay ends as to the party who asked, unless the court continues it after notice and a hearing, under 11 U.S.C. 362(e)(1). In an individual's chapter 7, 11 or 13 case the outer limit is longer: the stay terminates 60 days after the request unless the court decides within that period or extends it, under 11 U.S.C. 362(e)(2). Where an interest in property would suffer irreparable damage before a hearing can be held, the court shall grant the relief needed to prevent it, with or without a hearing, under 11 U.S.C. 362(f).

Who proves what is settled on the face of the statute. A party asking for relief carries the burden on the debtor's equity in the property, and the party opposing relief carries it on everything else, under 11 U.S.C. 362(g). Once the stay has ended, a party in interest can nail it down: under 11 U.S.C. 362(j), on request the court shall issue an order confirming that the automatic stay has been terminated. The decision to ask, and when, is one for counsel with your file open. What a page can do is tell you the stay freezes the record where it stood on the day of filing.