By James P. Frego II, Bankruptcy Attorney (MI Bar #P55727) · Updated June 25, 2026 · ~9 min read
An automatic stay is a court order that takes effect the instant you file for bankruptcy and immediately stops most collection actions, including foreclosures, repossessions, lawsuits, wage garnishments, and creditor phone calls. It is one of the most powerful protections in bankruptcy law, and for many Michigan families it is the reason to file in the first place.
Key Takeaways
- The automatic stay arises automatically the moment a bankruptcy petition is filed, with no separate court hearing required (11 U.S.C. § 362).
- It stops foreclosures, repossessions, garnishments, lawsuits, and collection calls from most creditors at once.
- It does not stop everything: criminal cases, most child support and alimony collection, and certain tax matters are excepted under § 362(b).
- A willful violation can expose a creditor to actual damages, attorney fees, and punitive damages under § 362(k).
- With filings up 11.9% to 591,850 in the year ending March 2026, the stay is protecting more households than it has in years (U.S. Courts).
Need the calls and garnishment to stop? Call (734) 213-2599 or request a free consultation online. We file Chapter 7, 13, and 11 cases across Michigan.
What is an automatic stay?
An automatic stay is a statutory injunction that immediately halts most collection activity the moment a debtor files a bankruptcy petition. It is created by Section 362 of the Bankruptcy Code and requires no motion, hearing, or judge's signature. The word "automatic" is literal: protection begins at the second of filing (Cornell Legal Information Institute).
Congress built the stay into the Bankruptcy Reform Act of 1978 for two reasons. First, it gives the debtor what the legislative history calls a "breathing spell" from creditors, a pause to reorganize finances without constant pressure. Second, it freezes the race to collect, so no single creditor can grab assets ahead of the others. That history describes the automatic stay as one of the fundamental debtor protections in all of bankruptcy law (11 U.S.C. § 362, legislative notes).
Every chapter triggers it. Whether you file Chapter 7, Chapter 13, or Chapter 11, the stay snaps into place the same day.
What does the automatic stay stop?
The automatic stay stops nearly every form of debt collection at once. For most filers, that means the phone stops ringing and the pressure lifts within hours. Specifically, the stay halts the following actions against you and your property:
- Foreclosure on your home, including a scheduled sheriff's sale
- Repossession of your vehicle or other secured property
- Wage garnishment and bank account levies
- Lawsuits and most pending civil judgments
- Collection calls, letters, and other creditor harassment
- Utility shutoffs for at least 20 days
- Evictions, in many situations, at least temporarily
For a homeowner days away from a foreclosure sale, or a worker watching a quarter of each paycheck disappear to garnishment, the stay can be the difference between losing everything and getting a fresh start.
Who and what does the automatic stay protect?
The automatic stay protects the debtor and the property of the bankruptcy estate, and it binds almost every type of creditor. It applies to individuals and businesses alike, in every chapter of consumer and business bankruptcy. Once a case is filed, these parties generally must stop collection:
- Secured creditors, such as mortgage lenders and auto lenders
- Unsecured creditors, such as credit card companies and medical providers
- Collection agencies and debt buyers
- Landlords pursuing rent or eviction (with exceptions)
- Utility companies
- Many government agencies, including most tax collection by the IRS or the State of Michigan
For individual filers, that protection translates into real relief: a chance to catch up on mortgage arrears in Chapter 13, prevent a utility disconnection, pause an eviction, and end the daily stress of collection calls.
What the automatic stay does NOT stop
The automatic stay is broad, but it is not absolute. Section 362(b) lists more than two dozen exceptions, meaning certain actions can continue even after you file. The most important ones for families to understand are these.
| Not stopped by the automatic stay | Why |
|---|---|
| Criminal proceedings against the debtor | Public-interest exception under § 362(b)(1) |
| Collection of child support and alimony | Domestic support obligations are excepted under § 362(b)(2) |
| Establishing or modifying a support order, paternity, custody | Family-law matters are excepted |
| Certain tax audits and demands for tax returns | Limited tax exceptions under § 362(b) |
| Some evictions where the landlord already had a judgment | Limited residential-eviction exception |
This is an important correction to a common myth. Bankruptcy will not erase or pause child support and alimony. Those obligations are treated as priority debts and continue throughout the case.
How long does the automatic stay last?
In a typical first-time bankruptcy, the automatic stay lasts for the life of the case, ending only when you receive a discharge, the case is dismissed, or the court closes it. For most filers, that means months of continuous protection. But two rules can cut the stay short for repeat filers (11 U.S.C. § 362(c)).
- One prior case dismissed in the past year: the stay terminates 30 days after filing unless you ask the court to extend it and show the new case was filed in good faith (§ 362(c)(3)).
- Two or more cases dismissed in the past year: no automatic stay arises at all unless the court grants one on motion (§ 362(c)(4)).
These limits exist to prevent abuse by serial filers. They are also a key reason that anyone who has filed before should work with an attorney, because protecting the stay may require an immediate motion.
Can a creditor get around the automatic stay?
Yes, in limited circumstances, by asking the court for relief from the stay. Under Section 362(d), a creditor can file a motion for relief from the automatic stay, asking the judge to lift it for a specific debt. This is most common with secured creditors who want to resume a foreclosure or repossession.
A court may grant relief "for cause," including a lack of adequate protection of the creditor's interest, or when the debtor has no equity in the property and it is not necessary to an effective reorganization. If a Chapter 13 plan payment is missed, for example, a mortgage lender may move to lift the stay. Staying current on plan payments is the best way to keep the stay in place.
What happens if a creditor violates the automatic stay?
Violating the automatic stay carries real consequences. Once a creditor has notice of the bankruptcy, any continued collection, a repossession, a lawsuit, even a single demand call, can be a violation. Under Section 362(k), an individual injured by a willful violation may recover actual damages, including attorney fees and costs, and in appropriate cases punitive damages.
To enforce the stay, your attorney documents the violation (date, time, and nature of each contact) and files a motion with the bankruptcy court. The court can hold the creditor in contempt, impose sanctions, and order compensation. In short, the stay has teeth, and creditors who ignore it do so at their own risk.
How the automatic stay helps Michigan filers
For Michigan households, the automatic stay is often the immediate lifeline. It is why filing can stop a Wayne County foreclosure, end a garnishment that is gutting a paycheck, and silence collection calls the same day. With U.S. bankruptcy filings rising 11.9% to 591,850 in the year ending March 31, 2026, more families than ever are relying on that protection (Administrative Office of the U.S. Courts, April 2026).
The stay is powerful, but it is also time-sensitive and full of exceptions. The right chapter, the timing of the filing, and protecting the stay for a repeat filer all require careful strategy. That is where experienced counsel makes the difference.
Stop the calls, the garnishment, and the foreclosure today
The automatic stay only works once your case is filed. The bankruptcy attorneys at Frego & Associates have filed more than 40,000 Michigan cases since 1999. Your first consultation is free.
Schedule Free Consultation Call (734) 213-2599Frequently Asked Questions
How long does the automatic stay last?
In most cases the automatic stay lasts until your case ends, whether by discharge, dismissal, or closing. If you had one bankruptcy case dismissed in the prior year, the stay ends after 30 days unless the court extends it. If you had two or more dismissed in the prior year, no stay arises automatically.
Does the automatic stay stop wage garnishment?
Yes. Filing bankruptcy triggers the automatic stay, which immediately halts wage garnishment, bank levies, and most other collection actions. Your employer must stop withholding once the garnishing creditor receives notice of the filing.
Does the automatic stay stop child support or alimony?
No. Under 11 U.S.C. § 362(b), the collection of domestic support obligations such as child support and alimony is excepted from the automatic stay. Those payments continue during bankruptcy.
What is a motion for relief from the automatic stay?
It is a request a creditor files asking the bankruptcy court to lift the stay for a specific debt, often a secured creditor seeking to foreclose or repossess. Under 11 U.S.C. § 362(d), the court can grant relief for cause or where the debtor has no equity in property that is not needed for reorganization.
What happens if a creditor violates the automatic stay?
Under 11 U.S.C. § 362(k), a person injured by a willful violation can recover actual damages, including attorney fees and costs, and in appropriate cases punitive damages. The debtor or their attorney enforces this by filing a motion with the bankruptcy court.
Sources
- Legal Information Institute, Cornell Law School. 11 U.S. Code § 362 - Automatic stay. Retrieved 2026-06-19.
- Legal Information Institute, Cornell Law School. Automatic stay (Wex Legal Dictionary). Retrieved 2026-06-19.
- Administrative Office of the U.S. Courts. (2026, April 23). Bankruptcies Increase 11.9 Percent. Retrieved 2026-06-19.
This article is for general informational purposes only and is not legal advice. The Bankruptcy Code and its exceptions are complex and apply differently to each situation. For advice about your circumstances, consult a licensed bankruptcy attorney.
