The “automatic stay” is one of the basic protections provided to debtors in a Chapter 11 business or personal case. It gives the debtor a much-needed breathing spell from creditors by pretty much stopping all collection activity, litigation, or contact from creditors of any kind.
In a Chapter 11 case (personal or business) filed in the Kansas City area (in either state), an automatic stay will immediately come into effect and will do the following: (1) stop the initiation or continuation of any legal, administrative, or other proceeding against the debtor that arose before the commencement of the case; (2) stop the enforcement of any judgment obtained before the commencement of the case; (3) stop any act to obtain possession or control of property of the estate; (4) stop any attempt to perfect or create any lien against property of the estate, even postpetition liens; (5) stop the setoff of any debt against the debtor. The automatic stay applies to all creditors, even the IRS.
The filing of a Chapter 11 bankruptcy case can be a very powerful tool to assist in a reorganization. It has articles and provisions that other chapters of the Bankruptcy Code do not have. If you have questions about Chapter 11 cases, please give us a call.
Read More: Involuntary Bankruptcy Cases