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Automatic Stay |
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An automatic stay is a temporary measure that is put into place automatically once a petition for bankruptcy has been filed by an individual or a company. Once an automatic stay is in place, the injunction prohibits creditors from taking certain actions against the debtor such as proceeding with lawsuits, attempting to collect debt, initiating foreclosure measures or garnishing wages. While it might seem an automatic stay is unfair to creditors, it actually can result in a more equitable distribution of bankruptcy assets because an automatic stay prevents an aggressive creditor from being able to lay claim to a large percentage of the person or entity’s assets before others have a chance.
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Credit Card Definitions > A - E > Automatic Stay
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