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Banking

  Banking   |   Terms
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  • October 2, 2022
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Automatic Stay

A freeze (legal moratorium) that is imposed by a bankruptcy court on a lender’s debt collection activities as soon as a borrower (debtor) files for bankruptcy (Chapter 11 protection). An automatic stay has the effect of preventing lenders from moving forward on debt collection because debtors are currently going through a bankruptcy process. During the period of automatic stay, lenders are prevented from pursuing any legal actions to enforce their claims against debtors. A lender can file a motion for relief from the automatic stay so that the court would allow him (it) to proceed with foreclosure procedures.


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