Amendments to the Bankruptcy Code in 2005 placed limits on the duration of the automatic stay for those who are repeat filers: debtors with a prior case pending in the last year that was dismissed get a stay of 30 days; debtors with two or more cases pending in the past year but dismissed get no stay at all.  In these situations, the automatic stay isn’t automatic at all–the debtor must request a stay from the court in order to get that protection.

The following acts are prohibited under the automatic stay:

* Beginning or continuing law suits;

* Collection calls;

* Repossessions;

* Foreclosure sales; and

* Garnishment or levies;

The automatic stay will remain in effect until:

* A judge lifts the stay at the request of a creditor;

* The debtor gets a discharge; or

* The item of property is no longer property of the estate.

Once the debtor’s bankruptcy is discharged, the automatic stay is replaced by a permanent injunction prohibiting creditors from all of those actions relating to discharged pre-petition debts that the automatic stay previously prohibited.

The automatic stay is not a “get out of jail free” card and will not stop the following:

* Criminal proceedings;

* Actions for a family support order or the modification of such order; or

* Actions to collect support from property that is not property of the estate

* Tax audit, demand for tax returns or assessment of tax (actual collection of tax is still stayed).

Those who willfully violate the stay can be held liable for actual damages caused by the violation and sometimes for punitive damages.  Courts can confine the right to damages to individual debtors and deny damages for stay violations as to corporate debtors in certain cases.  Since courts typically take several days or even weeks to mail creditors notice of the bankruptcy, the debtor or debtor’s counsel absolutely should give actual notice of the automatic stay to creditors to make sure they do not take any actions in the meantime.   Most creditor actions taken after the stay is in place are considered void or voidable, meaning any action the creditor takes in violation of the stay will have no legal effect on the debtor.

Since bankruptcy is such a complex proceeding, consumers may wish to consider consulting an experienced bankruptcy lawyer in order to discuss the ins and outs of bankruptcy protection and the automatic stay as pertains to their specific cases.