The Breadth of
the Bankruptcy Stay

The Bankruptcy Stay Can Protect More Than Formal Ownership Rights

The bankruptcy stay protects not just the “legal interests”, but also the “equitable interests” of the debtor filing for bankruptcy. Therefore not just an owner, but also one in possession of property or one asserting a disputed right to property, may also have an arguable stay. Whenever there is any question whether an action is or is not stopped by the automatic stay, created by a bankruptcy case, the creditor needs to proceed cautiously, and seek formal permission to go forward from the bankruptcy court, with a motion to lift the automatic stay. The debtor can oppose such motion to lift the stay, by showing that the creditor has no compelling reason to get around the bankruptcy case, that the creditor is not being prejudiced and the debtor has a need for continued protection from the bankruptcy stay.