automatic stay - Investment & Finance Definition
A provision allowed under U.S. Bankruptcy law that prevents the commencement or continuation of most judicial, administrative, or other proceedings against the debtor or the debtor’s estate after bankruptcy is filed. The purpose behind an automatic stay is to give breathing room to a debtor filing a Chapter 11 or Chapter 13 bankruptcy, and to give a Chapter 7 trustee the time and protection to administer the assets of the estate. The automatic stay also stops Chapter 7 debtors from being pressured by collection agencies. However, anyone who doesn’t want to abide by the automatic stay can file a motion with the bankruptcy court and ask for an exception.