Most creditor actions against a debtor are immediately and automatically stayed upon the filing of a bankruptcy petition. No court order is required.
The automatic stay prevents creditors from attempting to collect any prebankruptcy claim or from enforcing any prebankruptcy judgment—i.e., the Bank may not levy upon the debtor’s assets, demand payment, or use any other enforcement procedure to satisfy a judgment.
For the duration of the stay, creditors are also barred from creating, perfecting or enforcing liens against property of the Bankruptcy estate; however, the Bank can and should file a UCC-3 continuation during a bankruptcy proceeding. A secured creditor is prevented from foreclosing on the debtor’s real property (even if the property was posted for foreclosure when the Bankruptcy petition was filed) unless the creditor is successful in having the stay lifted.
Creditors with a right of setoff may temporarily refuse to pay their debts to the Bankrupt debtor upon the latter’s demand, pending application for relief from the automatic stay. The temporary refusal to pay (as distinguished from a “permanent” and “absolute” refusal to pay) is not itself the exercise of a setoff right so as to violate the automatic stay. See “Set-Off of Mutual Debts” below.