The automatic stay provides a period of time in which all judgments, collection activities, foreclosures, and repossessions of property are suspended and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition. A stay of creditor actions against the debtor automatically goes into effect when the bankruptcy petition is filed. The stay provides a breathing spell for the debtor, during which negotiations can take place to try to resolve the difficulties in the debtor's financial situation.

In Alaska, as in all states across the United States, the automatic stay is a fundamental provision of the federal Bankruptcy Code (11 U.S.C. § 362). When a debtor files for bankruptcy, the automatic stay immediately takes effect, halting most creditors from continuing with collection actions, including lawsuits, wage garnishments, and even phone calls demanding payments. This stay applies to actions against both the debtor and the debtor's property. The automatic stay's purpose is to provide a 'breathing spell' for the debtor from financial pressures while a plan is developed to pay off debts or discharge them in bankruptcy. It also protects creditors by ensuring an orderly process, preventing a rush to seize the debtor's assets. Creditors can petition the court for relief from the stay if they believe their interests are unjustly harmed. The specifics of how the automatic stay operates can be complex, and debtors in Alaska facing bankruptcy should consult with an attorney to understand how the law applies to their particular circumstances.