The second your petition hits the court's electronic docket, almost every collection effort against you has to stop. Not after a hearing. Not after a judge signs something. At the moment of filing.
That is section 362 of the Bankruptcy Code, and it is the single most useful thing bankruptcy does for a person in a crisis. Wage garnishments stop. Bank levies stop. Foreclosure sales get postponed. The phone gets quiet.
What stops, and how quickly
Filing is a timestamp. Our office files electronically, so the case number and the exact minute of filing exist within seconds. That timestamp is what you send to a garnishing employer, a levying bank, or a repo company's dispatcher.
- Wage garnishment. The payroll department has to stop withholding once notified.
- Bank levies. Money the sheriff or marshal has not yet turned over to the creditor is usually recoverable.
- Vehicle repossession, including a car already loaded on the truck but not yet sold.
- Foreclosure sales, which get taken off calendar.
- Lawsuits in Los Angeles Superior Court, which freeze wherever they happen to be.
- Utility shutoffs, for a period, subject to a deposit requirement.
- Collection calls, letters, texts and emails from every creditor listed.
Speed matters more than most people realize. If a levy has already run and the funds have been paid over to the judgment creditor, getting them back is a fight. If you file first, there is nothing to fight about.
What the stay does not touch
I'll be blunt about this one, because people are sometimes shocked. The stay is broad, but it is not everything.
- Criminal proceedings continue. A bankruptcy filing is not a shield against a prosecution.
- Most domestic support obligations, meaning child support and spousal support, are carved out. Support garnishments generally keep running.
- Certain tax matters continue, including audits and demands for unfiled returns, though collection activity is usually restrained.
- Actions to establish paternity, custody or a dissolution, apart from the property division.
- Debts you incur after filing. The stay looks backward, not forward.
Repeat filings shorten the clock
If you had a bankruptcy case dismissed within the previous year, the stay in your new case may expire after 30 days unless a motion to extend it is filed and granted. Two dismissals in a year and there may be no automatic stay at all without a court order. Tell your attorney about every prior filing, even the ones you thought were withdrawn.
Making the stay actually work
A stay nobody knows about does not help you. The court mails notice to every creditor on your schedules, but that mailing takes several days, and a garnishment can take another paycheck in the meantime.
So the same day we file, we fax and email the case number to the parties who are actively squeezing you. The employer's payroll processor. The levying officer. The collection firm's managing attorney. That direct notice is what stops the bleeding within hours instead of within a week.
“I had a client whose paycheck was being garnished by 25 percent and who was three days from an eviction judgment on top of it. We filed at 9:40 in the morning and had the payroll notice sent by 10:15. Her next check was whole. That is the entire point of the stay, and it is why I do not like waiting for Monday.”
Naomi Reyes-AshfordWhen a creditor ignores it
Some do. Usually it is a small collection outfit that never updated its file, and a phone call with your case number ends it. Occasionally it is willful, and a willful violation of the stay can expose the creditor to actual damages, attorney fees, and in some circumstances punitive damages.
Keep the voicemail. Screenshot the text. Save the envelope with the postmark. Evidence of a violation is much easier to gather in the moment than to reconstruct three months later.
How long it lasts
In a Chapter 7, the stay generally runs until your discharge, which for most cases arrives around 60 to 90 days after the 341 meeting. After discharge, a permanent injunction replaces it for debts that were wiped out.
In a Chapter 13, the stay runs for the life of the plan, three to five years, and it also protects co-signers on consumer debts in a way Chapter 7 does not. A secured creditor can ask the court for relief from the stay, and if you stop making payments on a car or a house, that motion is usually how the story goes.
Questions we get asked
How fast does the stay take effect?
Immediately upon filing. There is no waiting period and no hearing. The practical delay is in notifying the creditor who is taking your money, which is why we send the case number directly rather than waiting on the court's mailing.
Will my employer find out?
If your wages are being garnished, yes, because payroll has to be told to stop. Otherwise your employer is not notified of a Chapter 7. In a Chapter 13 in this district, plan payments are frequently made by payroll deduction, so payroll learns of the case that way.
Can a creditor get around the stay?
They can file a motion for relief from the stay and ask a bankruptcy judge to let them proceed. That is common with cars and houses where payments have stopped. It is a noticed motion, so you will get notice and a chance to respond.
Does the stay stop a garnishment for child support?
Generally no. Domestic support obligations are excepted, and support arrears are not dischargeable in either chapter. A Chapter 13 can give you three to five years to catch up on the arrears, which is often the practical relief people are actually looking for.
If something is scheduled against you this week, a sale date, a hearing, a garnishment start date, say so when you call (310) 555-0184 and give the date first. That one detail decides whether we file today or work through documents at a normal pace.