The Automatic Stay - 11 U.S.C. § 362

What the stay covers

Section 362(a) imposes an immediate, automatic injunction against a broad set of collection activities at the moment of filing. Covered actions include commencement or continuation of judicial, administrative, or other actions against the debtor; enforcement of a pre-petition judgment; acts to obtain possession of estate property; creation, perfection, or enforcement of liens against estate property; set-off of mutual debts; and most collection attempts on pre-petition claims.

The stay covers the debtor, the debtor's property, and the property of the estate. In Chapter 13, the co-debtor stay under § 1301 extends limited protection to non-filing co-obligors on consumer debts.

What the stay does not cover

Section 362(b) lists more than two dozen categorical exceptions. Important exceptions include:

• Criminal proceedings against the debtor
• Establishment of paternity or modification/enforcement of domestic-support obligations
• Collection of domestic-support obligations from property that is not estate property
• Actions by a governmental unit to enforce its police or regulatory power (excluding money-judgment enforcement)
• Tax assessment (but not collection of pre-petition taxes from estate property)
• Eviction proceedings in certain circumstances where a state-court judgment was entered before filing
• Setoff of income-tax refunds against income-tax liabilities of the same year

Duration of the stay

The stay continues until the earliest of: the case being closed, dismissed, or discharge being granted or denied; court order granting relief from the stay; or conversion to another chapter that triggers a new stay analysis.

Repeat filers face two statutory stay-reduction provisions: § 362(c)(3) terminates the stay after 30 days for a debtor who had one prior case dismissed within the preceding year, unless the debtor moves to extend; and § 362(c)(4) denies the stay entirely when a debtor had two or more prior cases dismissed within the preceding year, absent a motion to impose the stay.

Relief from stay

A creditor, lessor, or other party in interest may move under § 362(d) for relief from the stay. The three principal grounds are cause (including lack of adequate protection), absence of debtor equity coupled with non-necessity in an effective reorganization, and, for single-asset real estate or serial-filer situations, specialized criteria under § 362(d)(3) and § 362(d)(4).

A motion for relief from stay is decided on a shortened schedule - § 362(e) provides that the stay terminates 30 days after a motion is filed unless the court orders otherwise after notice and a hearing.

Remedies for stay violations

§ 362(k)(1) authorizes an individual debtor injured by a willful violation of the stay to recover actual damages, including costs and attorneys' fees, and - in appropriate circumstances - punitive damages.

The § 362(k) damages remedy is available to individual debtors. Corporate debtors historically have more limited remedies and typically rely on civil contempt under § 105(a) or other general equitable powers of the bankruptcy court. This is the subject of ongoing circuit split analysis, with some circuits allowing corporate debtors to recover under § 362(k) and others limiting that remedy to individual debtors.

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