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 New Hampshire, 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, 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, allowing them time to work with their attorney to reorganize their finances without the pressure of impending creditor actions. It also ensures that all creditors are treated fairly by preventing one creditor from pursuing aggressive action to the detriment of others. The stay remains in effect until the bankruptcy case is resolved, the stay is lifted by the court, or the subject property is no longer part of the bankruptcy estate.