What is the automatic stay in bankruptcy?

The automatic stay is a federal court order under 11 U.S.C. section 362 that takes effect the instant you file bankruptcy. It stops most collection actions including wage garnishment, foreclosure, repossession, lawsuits, and creditor calls.

What does the automatic stay stop?

Wage garnishment, foreclosure sales, vehicle repossession, debt collection lawsuits, creditor calls and letters, bank account levies, utility disconnection (for 20 days), and IRS collection.

What does the automatic stay NOT stop?

Child support and alimony collection, most criminal proceedings, certain tax audit proceedings, pension plan loan repayments, and evictions where the landlord already had a possession judgment.

What happens if a creditor violates the stay?

Under section 362(k), you may recover actual damages, attorney fees, and punitive damages. The D. Minn. takes stay violations seriously.

The Automatic Stay in Minneapolis Bankruptcy

Q: How long does the automatic stay last?

Chapter 7: until discharge (3-4 months). Chapter 13: for the full 3-5 year plan. Repeat filers may have reduced protection.

The moment you file bankruptcy in the D. Minn., a powerful federal court order called the automatic stay goes into effect. It immediately stops most creditor actions against you.

What the Automatic Stay Stops Immediately

Stopped by the Stay

Wage garnishment -- Minnesota limits garnishment to 25% of disposable earnings, but even that stops immediately upon filing
Foreclosure -- All foreclosure proceedings halted, including Minnesota's non-judicial foreclosure by advertisement process
Vehicle repossession -- Creditors cannot repossess vehicles, important given Minnesota's 30-day pre-repo notice requirement
Lawsuits -- All pending civil collection lawsuits are paused
Creditor calls and letters -- All collection contacts must stop
Bank account levies -- Creditors cannot freeze or seize accounts
Utility shutoffs -- Cannot be disconnected for 20 days (critical during Minnesota winters)
IRS collection -- Tax liens and levies are paused

NOT Stopped by the Stay

Child support collection -- Domestic support obligations continue
Criminal proceedings -- Criminal cases continue
Tax audits -- IRS can audit but cannot collect
Pension loan repayment -- Wage deductions continue
Paternity and custody -- Family court proceedings continue
Domestic violence proceedings -- Protective orders continue
Government regulatory actions
Post-judgment evictions

Stay Violations -- What to Do

If a creditor continues collection after you file in the D. Minn., that violates section 362(k). Steps:

Document everything. Save letters, record call dates and times, keep screenshots.
Notify the creditor in writing. Inform them of your case number and filing date.
Notify your attorney. They can file a motion for contempt and sanctions.
You may be entitled to damages. Actual damages, attorney fees, and in egregious cases, punitive damages.

How Long Does the Automatic Stay Last?

Chapter 7

Until case closure, dismissal, or discharge -- typically 3-4 months. The discharge injunction then permanently replaces the stay.

Chapter 13

For the full 3-5 year repayment plan. Extended protection is key for Minneapolis homeowners saving homes and vehicles.

Repeat Filers: Reduced Protection

One prior dismissal in past year: Stay expires after 30 days unless extended (section 362(c)(3))
Two or more: No stay at all without court order (section 362(c)(4))

Minnesota-Specific Considerations

Foreclosure: Minnesota uses non-judicial foreclosure with a 6-month redemption period (12 months for properties over 10 acres). The stay halts this at any stage.
Garnishment: Minnesota limits garnishment to the lesser of 25% of disposable earnings or the amount exceeding 40 times the state minimum wage ($10.85/hour, so $434/week). The stay stops even this limited garnishment.
Vehicle exemption: Minnesota protects $5,000 of vehicle equity (Minn. Stat. section 550.37, subd. 12(a)).
Homestead: Minnesota's $450,000 homestead exemption (Minn. Stat. section 510.01-510.02) protects home equity while the stay prevents foreclosure.
Winter utility protection: The stay's 20-day utility shutoff protection is especially critical during Minnesota winters. Beyond the stay, Minnesota's Cold Weather Rule (Minn. Stat. section 216B.096) provides additional protection from October 1 through April 30.

Frequently Asked Questions

What is the automatic stay?

A federal court order under 11 U.S.C. section 362 that stops most collection actions the instant you file bankruptcy.

What does it stop?

Wage garnishment, foreclosure, repossession, lawsuits, creditor calls, bank levies, utility shutoffs, and IRS collection.

What does it NOT stop?

Child support, criminal proceedings, tax audits, pension loans, and post-judgment evictions.

What about stay violations?

You may recover actual damages, attorney fees, and punitive damages under section 362(k).

Does it apply to repeat filers?

Reduced protection: 30 days with one prior dismissal, no stay with two or more without court order. Check the 1328(f) screener.

How long does it last?

Chapter 7: ~3-4 months. Chapter 13: full 3-5 year plan. The discharge injunction replaces it permanently.