Section 362
Definition:
Section 362 of the U.S. Bankruptcy Code establishes the “automatic stay,” which immediately halts most collection actions, lawsuits, and enforcement activities against a debtor or the debtor’s property upon filing for bankruptcy. The automatic stay is designed to provide debtors with temporary relief and preserve the bankruptcy estate while the case proceeds.
Section 362 Information
The automatic stay under Section 362 applies to actions by creditors, including collection calls, foreclosures, repossessions, and garnishments. It prevents individual creditors from taking unilateral action, ensuring equitable treatment of all creditors. While the stay is broad, there are exceptions—such as certain criminal proceedings, family law matters, and government regulatory actions. Creditors may request the court to lift the stay if they can show cause, such as lack of adequate protection or the debtor’s abuse of the stay.
Florida Legal Definition
In Florida, Section 362 is applied through federal bankruptcy courts. Florida debtors benefit from the automatic stay as soon as they file a petition in federal court. Florida courts follow federal procedures for enforcing or modifying the stay, and state-specific laws, such as those relating to homestead property or secured real estate interests, may affect how the stay interacts with creditors’ rights. Violations of the stay can result in penalties, damages, or attorney fees awarded to the debtor.
How It’s Used in Practice
Bankruptcy attorneys file petitions on behalf of clients to immediately trigger Section 362’s automatic stay. Trustees and courts use the stay to protect the bankruptcy estate from depletion or harassment by creditors. Creditors must halt collection efforts and may file motions seeking relief from the stay to continue certain actions. Understanding Section 362 is critical for both debtors and creditors to ensure compliance and to protect rights under bankruptcy law.
Key Takeaways
- Section 362 imposes an automatic stay on most collection actions upon filing for bankruptcy.
- It prevents creditors from taking unilateral actions against the debtor or property.
- Florida debtors benefit immediately upon filing, subject to federal and state law interactions.
- Creditors may request relief from the stay under certain circumstances.
- Violations of the stay can result in damages and penalties to creditors.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
Trust • Experience • Results
Ready to Get Started?
Get started with Barnes Walker today.
