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 California, as in all states across the U.S., 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, or even contacting the debtor to demand payment. This stay applies to actions related to debts that were incurred before the filing of the bankruptcy petition. The automatic stay is designed to provide a 'breathing spell' for the debtor, during which time they can work with their attorney to reorganize their finances without the pressure of impending creditor actions. It also stops foreclosures, evictions, repossessions, and utility shut-offs, although there are certain exceptions to the stay, such as for criminal proceedings, child support, and alimony. 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 applies can be complex, and debtors in California should consult with an attorney to understand how the federal bankruptcy laws interact with California's state laws regarding exemptions and property rights.