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 Michigan, as in all states, the automatic stay is a fundamental provision of the federal Bankruptcy Code (11 U.S.C. § 362) that takes effect the moment a bankruptcy petition is filed. The automatic stay immediately halts most creditors from taking any collection actions against the debtor or the debtor's property. This includes stopping lawsuits, wage garnishments, and even phone calls demanding payments. The stay is designed to provide a 'breathing spell' for the debtor, during which time the debtor's assets are protected while a plan is developed to pay off debts or discharge them in bankruptcy. The automatic stay remains in effect until the bankruptcy case is closed, dismissed, or until the bankruptcy court grants a creditor relief from the stay to proceed with a specific action. Creditors who willfully violate the automatic stay can be subject to court sanctions. It's important to note that there are some exceptions to the automatic stay, such as certain tax proceedings, child support actions, and criminal proceedings, where the stay may not apply or may be lifted upon a creditor's request.