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 Tennessee, as in all states, the automatic stay is a fundamental provision of the federal Bankruptcy Code (11 U.S.C. § 362) that takes effect immediately upon the filing of a bankruptcy petition. The automatic stay temporarily halts most creditors from pursuing collection activities against the debtor. This includes stopping lawsuits, foreclosures, garnishments, and repossessions related to debts that were incurred before the bankruptcy filing. The purpose of the automatic stay is to provide the debtor with a 'breathing spell' from creditors, allowing time to reorganize their finances without the pressure of immediate collection efforts. Creditors are prohibited from taking any action to collect debts without first obtaining permission from the bankruptcy court. Violations of the automatic stay can result in court sanctions against the creditor. The stay remains in effect until the bankruptcy case is resolved, dismissed, or until the court grants a motion to lift the stay for a specific creditor.