Automatic Stay Stops Creditors in Their Tracks

Under Section 362 of the U.S. Bankruptcy Code, creditors are prohibited from continuing any further collection action against a debtor who files for Bankruptcy relief. If a creditor is aware of the automatic stay, but continues to pursue collection of a debt, the creditor can be held in contempt for failure to observe the automatic stay. The automatic stay prohibits creditors from garnishing your wages, freezing bank accounts, foreclosure, lawsuits, repossession, and making personal contact with you for the purpose of collecting a debt.