It is invoked immediately upon filling a petition and remains effective until a discharge order is granted or a creditor successfully moves the court to lift or modify the stay. The stay prevents creditors from harassing the debtor or otherwise trying to collect on their debts. It also stops or prevents certain types of civil lawsuits against the debtor. Bankruptcy is sometimes used more for the power of the automatic stay than for the debtor's financial problems. To lose all of one's assets in bankruptcy would violate the code's concept of providing the debtor with a fresh start.
Exemptions enable debtors to keep certain property.
Many states have their own exemptions, so it is important to get advice from someone familiar with your state's law. Protecting the family home from foreclosure is often an important reason for seeking bankruptcy protection. The automatic stay halts the lender's foreclosure activity, giving the homeowner time and leverage to work out an agreement with the lender and possibly keep the home. Debtors should not make transactions in contemplation of bankruptcy, such as making credit card purchases immediately before filing the petition. Improper payments or transfers can be recovered by the bankruptcy trustee.