What is an automatic stay?

Minneapolis Bankruptcy attorney Steven Silton defines automatic stay.

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The automatic stay is one of the big benefits of filing bankruptcy. An automatic stay is a court-ordered injunction which immediately stops all actions by outside creditors and creates a breathing spell in which the company can review their existing debts and determine whether they’re either capable of paying them back pursuant to a plan or reorganization, or whether there’s gonna have to be an orderly liquidation of their assets. It’s essentially a stop sign for all existing claims.