Automatic Stay of Proceedings in Bankruptcy

The video tutorial explains the stay of proceeding power granted by Section 362 of the Bankruptcy Code, which halts all collection efforts against a debtor in possession. It covers exceptions where creditors can seek relief from the stay, particularly in cases involving secured creditors with no equity in the property. The tutorial also discusses general exceptions for cause and notable exceptions like paternity, alimony, and government actions. It introduces tests like the pecuniary interest test and public interest test to determine if government actions should be stayed. The video concludes with a summary of the general rules and exceptions.

What is the primary function of the stay of proceeding power under Section 362 of the Bankruptcy Code?

• To enable debtors to acquire more assets

• To allow creditors to collect debts more efficiently

• To provide debtors with a temporary relief from collection efforts

• To increase the interest rates on outstanding debts

Under what condition can a secured creditor seek relief from the automatic stay?

• When the debtor has significant equity in the property

• When the property is essential for the reorganization of the estate

• When the debtor is making regular payments

• When the debtor has no equity in the property

Which of the following is NOT a reason for a court to relieve the stay?

• The debtor has no equity in the property

• The creditor lacks adequate assurance of their security interest

• The debtor is making regular payments

• The property is not necessary for reorganization

Which type of case is generally NOT stayed under Section 362?

• Civil lawsuits for damages

• Criminal cases

• Paternity or alimony cases

• Government regulatory actions

What test might a court use to determine if a government action should be stayed?

• Debtor interest test

• Public interest test

• Creditor interest test

• Equity interest test