As a result of the "Automatic Stay" in a bankruptcy, what happens?

The "Automatic Stay" in a bankruptcy case is a legal provision that immediately stops most actions by creditors to collect debts from the debtor once the bankruptcy petition is filed. This means that during the bankruptcy process, creditors are prohibited from contacting the debtor to demand payment or pursue collection actions.

The purpose of the Automatic Stay is to give the debtor a reprieve from financial pressures and allow them to reorganize or liquidate their debts without the distress of ongoing collection activities. It provides a form of protection, ensuring that the debtor can navigate their financial situation more effectively and equitably.

The other options do not accurately describe the effects of the Automatic Stay: creditors may not initiate contact about debts, and the debtor does not have the immediate ability to sell assets without court approval. Furthermore, while the bankruptcy court does gain some authority over the debtor's finances, the characterization of taking "full control" isn’t entirely accurate as the debtor retains certain rights and responsibilities throughout the process.