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 Delaware, as in all states, the automatic stay is a provision under federal bankruptcy law that immediately stops most creditors from pursuing debt collection against individuals or entities once they have filed for bankruptcy. This legal pause is provided by Section 362 of the Bankruptcy Code. The automatic stay applies to various actions, including judgments, collection activities, foreclosures, and repossessions related to debts that were incurred before the bankruptcy filing. The stay is intended to give the debtor a 'breathing spell' from financial pressures, allowing time to reorganize or negotiate with creditors under the protection of the bankruptcy court. Creditors are prohibited from taking any action to collect debts without first obtaining permission from the bankruptcy court, and any actions taken in violation of the automatic stay may be deemed void. The automatic stay remains in effect until the bankruptcy case is closed, dismissed, or until the debtor receives a discharge, or until the court lifts the stay at a creditor's request under certain circumstances.