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 Indiana, 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 that have filed for bankruptcy. This legal pause is triggered the moment a bankruptcy petition is filed with the court. The automatic stay is designed to provide a 'breathing spell' for the debtor, during which time they are protected from lawsuits, foreclosures, wage garnishments, and other collection activities. It allows the debtor to work with their attorney to reorganize their finances or to develop a plan for repayment under the bankruptcy code without the immediate threat of losing their property or facing other legal actions. Creditors are prohibited from taking any action to collect debts without permission from the bankruptcy court, and violations of the automatic stay can result in penalties for creditors. The stay remains in effect until the bankruptcy case is resolved, the stay is lifted by the court, or the subject debt is discharged.