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 Jersey, 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 stops most creditors from taking any further collection actions against the debtor. This includes halting foreclosure proceedings, repossessions, evictions, garnishments, attachments, utility shut-offs, and debt collection harassment. The stay is designed to provide a 'breathing spell' for the debtor, during which they can reorganize their finances without the pressure of immediate collection efforts. Creditors are prohibited from pursuing any action to collect debts without first obtaining permission from the bankruptcy court, which is typically granted only for good cause shown. The automatic stay remains in effect until the bankruptcy case is closed, dismissed, or until the debtor receives a discharge, although there are certain exceptions and circumstances under which a creditor can ask the court to lift the stay.