A bankruptcy filing can put a legal pause on the collection pressure that has been building around you.
Once your petition is filed, the automatic stay takes effect and can stop actions such as wage garnishment, repossession, foreclosure, and many collection lawsuits.
That protection can give you room to address your debts without every paycheck, vehicle, or phone call creating another immediate problem.
The stay has exceptions, however, and repeat bankruptcy filings can change how long the protection lasts. Kathryn Wiley and the team at Wiley & Jowers can review your situation and explain what the automatic stay may cover in your case.
Key Takeaways
- The automatic stay begins when you file your bankruptcy petition. You do not need a separate court order to activate it.
- It can stop wage garnishments, repossessions, foreclosures, collection lawsuits, and many other efforts to collect a debt.
- Certain matters, including child support, alimony, criminal proceedings, and some tax-related actions, can continue despite the stay.
- If you had one bankruptcy case dismissed within the previous year, the stay may last only 30 days unless the court extends it. Two recent dismissals can prevent the stay from taking effect unless the court orders otherwise.
- A creditor that knowingly continues collection activity after learning about your bankruptcy may face consequences, including damages and attorney’s fees.
- The bankruptcy court serving Iberia Parish is part of the Western District of Louisiana, which processed thousands of bankruptcy cases during the twelve months ending in March 2025.
What Is the Automatic Stay in Bankruptcy?
The automatic stay is a federal injunction that pauses most collection activity when a bankruptcy case is filed.
Section 362 of the Bankruptcy Code applies the stay to Chapter 7, Chapter 13, and Chapter 11 cases and can protect property and income involved in the bankruptcy case.
You do not have to wait for a judge to sign a separate order. The protection arises when the bankruptcy petition is filed. Creditors are then required to comply with the stay once they have notice of the bankruptcy.
The automatic stay does not erase your debts. Instead, it creates a pause in many collection efforts while the bankruptcy case proceeds. Whether a debt can ultimately be discharged is a separate question determined by the bankruptcy process.
For an overview of how bankruptcy cases proceed, the U.S. Courts’ bankruptcy process information provides additional federal guidance.
When Does the Automatic Stay Take Effect?
The automatic stay begins when your bankruptcy petition is filed with the court. There is no separate waiting period for the stay to attach in an ordinary bankruptcy filing.
That timing can be important when a creditor is already pursuing collection. Once the creditor receives notice of the bankruptcy, collection activity covered by the stay should stop. Your attorney will typically make sure the creditors listed in your petition receive notice of the filing.
For example, a creditor pursuing a wage garnishment may need to stop the garnishment after receiving notice of the bankruptcy. A lender pursuing repossession or foreclosure may also have to halt covered collection activity.
The practical effect can be significant. Instead of responding to another demand for payment or worrying about the next collection step, you have a legal framework governing what creditors can do while your bankruptcy case is pending.
What Can the Automatic Stay Stop?
The automatic stay covers a broad range of collection activity. Depending on the circumstances of your case, it may stop:
- Wage garnishments taken from your paycheck
- Repossession of a vehicle
- Foreclosure proceedings involving your home
- Collection calls and letters
- Lawsuits seeking payment of pre-bankruptcy debts
- Collection actions that were already underway when you filed
- Certain utility shutoffs during the period protected by the Bankruptcy Code
The stay is broad, but it is not unlimited. Federal bankruptcy law identifies several exceptions, and creditors can also ask the bankruptcy court for permission to proceed with certain actions.
What Does the Automatic Stay Not Stop?
Filing bankruptcy does not put every legal proceeding on hold. Some obligations and cases are specifically excluded from the automatic stay, while others are subject to separate rules.
Understanding those exceptions before filing can help you avoid relying on protection that does not apply to a particular problem.
Family Court and Domestic Support Obligations
The automatic stay does not stop many proceedings involving domestic support obligations. Child support and alimony matters can continue, and certain proceedings involving paternity, custody, and support are also outside the stay’s protection.
Bankruptcy therefore does not replace family court orders or prevent every family-law proceeding from moving forward.
Criminal Proceedings
A pending criminal case can continue after a bankruptcy filing. The automatic stay does not prevent prosecutors from moving forward with criminal proceedings.
Related financial obligations can involve additional bankruptcy rules, so you should not assume that filing bankruptcy will pause every consequence associated with a criminal case.
Tax Proceedings and Certain IRS Actions
Some IRS activities are also excluded from the automatic stay. Tax audits, notices of tax deficiency, and demands to file tax returns can continue after a bankruptcy filing.
Tax Court proceedings may involve their own rules, so the fact that a matter involves the IRS does not by itself tell you whether the stay applies.
Eviction proceedings can also require close attention. When a landlord already has a judgment for possession before the bankruptcy case is filed, the automatic stay may not prevent enforcement of that judgment.
These exceptions do not eliminate the protection bankruptcy provides for other qualifying collection activity. They mean that specific matters may continue under the rules that apply to them.
What Happens When You File Bankruptcy Again?
A previous bankruptcy case can affect the automatic stay in a later filing.
If you had one bankruptcy case dismissed during the year before your new filing, the automatic stay generally lasts only 30 days unless the court extends it. You must ask the court for an extension and satisfy the applicable requirements.
The situation becomes more restrictive after two bankruptcy cases have been dismissed within the preceding year. In that circumstance, the automatic stay may not take effect at all unless the court orders that it apply.
Because these rules can affect your protection from the first day of the case, repeat filers should address the issue before filing rather than discovering the limitation after collection activity resumes.
If you are considering another bankruptcy after a recent dismissal, Wiley & Jowers can review the filing history with you and explain what the 30-day rule or no-stay rule could mean for your case.
What If a Creditor Violates the Automatic Stay?
A creditor that continues collection activity after learning about your bankruptcy may be violating the automatic stay.
The consequences can include:
- A court finding the creditor in contempt
- Recovery of actual damages caused by the violation
- Reimbursement of attorney’s fees related to addressing the violation
- Punitive damages in appropriate cases involving serious or egregious conduct
Keep records if collection activity continues after your filing. Save letters, notices, voicemails, and other communications, and make note of dates and phone numbers associated with continued collection efforts.
Automatic Stay Protection in New Iberia and the Western District of Louisiana
For residents of Iberia Parish, bankruptcy cases are handled through the Lafayette Division of the United States Bankruptcy Court for the Western District of Louisiana.
The local court handles questions involving the automatic stay, including disputes over whether the stay applies, requests to extend protection for certain repeat filers, and motions by creditors seeking permission to continue collection activity.
Bankruptcy is an established part of the federal court system in the region. The Western District of Louisiana processed 5,724 bankruptcy cases during the twelve months ending in March 2025, with Chapter 13 repayment cases making up a substantial portion of those filings.
For someone dealing with garnishment, repossession, foreclosure, or persistent collection efforts in New Iberia, knowing that the stay exists is only the beginning. The more important question is whether it applies to the specific action you are facing and what happens after the filing.
Frequently Asked Questions
Does the automatic stay stop wage garnishment right away?
The automatic stay generally stops wage garnishment when the bankruptcy case is filed. There can be a short administrative delay before an employer’s payroll system reflects the change, so a deduction appearing on an immediately following paycheck does not necessarily mean the stay has been ignored.
If garnishments continue after the bankruptcy filing and notice has been provided, bring the issue to your attorney’s attention.
Can debt collectors still call after I file bankruptcy?
Once a debt collector has received notice of your bankruptcy, collection activity covered by the automatic stay should stop. If calls or other collection attempts continue, keep a record of the communications and provide that information to your attorney.
The date, telephone number, name of the caller, and substance of the communication can all help document what occurred.
Does the automatic stay stop an eviction?
Not in every situation. The stage of the eviction proceeding matters.
If the landlord obtained a judgment for possession before you filed bankruptcy, the automatic stay may not prevent the landlord from enforcing that judgment. An eviction that has not reached that stage may be treated differently.
Because timing is important, speak with a bankruptcy attorney promptly if an eviction is already underway.
What if my previous bankruptcy case was dismissed?
A dismissal within the previous year can limit the automatic stay in your new case. After one recent dismissal, the stay generally lasts 30 days unless the court grants an extension.
Two dismissals within the applicable one-year period can result in no automatic stay unless the court orders otherwise. If you are considering another filing, address the prior dismissal with your attorney before submitting a new petition.
Can a creditor ask the court to lift the automatic stay?
Yes. A creditor can file a motion for relief from the automatic stay and ask the bankruptcy court for permission to continue a collection action.
The court considers the circumstances presented by the creditor and the debtor. Issues such as missed payments or a lack of equity in property can be relevant to the court’s decision.
If a creditor files a motion for relief from the stay in your case, your attorney can review the motion and determine how to respond.
Wiley & Jowers LLC: Your New Iberia Bankruptcy Law Firm
When creditors are already pursuing your paycheck, vehicle, home, or other property, bankruptcy can raise an immediate question about whether those collection efforts will stop.
The automatic stay provides important federal protection, but the details matter. Some actions are excluded, creditors can seek relief from the stay, and prior bankruptcy filings can affect how much protection a new case provides.
Wiley & Jowers helps clients in New Iberia and throughout Acadiana evaluate those issues before and during bankruptcy proceedings. Kathryn Wiley and the firm’s team can discuss your debts, prior filings, and the collection actions you are facing so you can understand how the automatic stay may apply.
Contact Wiley & Jowers today to arrange an initial consultation at no cost and discuss your bankruptcy options.
