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Presented by Hon. Deborah Thorne

The automatic stay serves two main purposes: it gives the debtor breathing space to reorganize or turn over assets, and it stops creditors from hounding the debtor.

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Automatic Stay

Deborah Thorne, a bankruptcy judge, explains the automatic stay, a key provision in the Bankruptcy Code that protects debtors from creditor actions once a bankruptcy petition is filed. The automatic stay, outlined in section 362, halts litigation and collection efforts, providing debtors with breathing space to reorganize or liquidate assets. Exceptions exist for criminal proceedings, domestic support, and tax audits. Creditors can seek relief from the stay if adequate protection is insufficient or the property is not necessary for reorganization. The stay can be modified or terminated if the debtor fails to show good faith, such as in repeat filings or non-compliance with notice requirements. Violations of the stay can result in sanctions for creditors.

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20 minutes 53 seconds

Bio :

Hon. Deborah L. Thorne is a U.S. Bankruptcy Judge for the Northern District of Illinois in Chicago, appointed on Oct. 22, 2015. Prior to joining the bench, she was a partner in the Chicago office of Barnes & Thornburg LLP, where she was a member of its Financial Insolvency and Restructuring Department. Her practice included the representation of creditors and other parties in insolvency proceedings, and she frequently served as a federal equity receiver in commodity fraud cases brought by the Commodity Futures Trading Commission. In addition, she co-chaired the Women’s Initiative for the firm. Judge Thorne is past chair of the Chicago Bar Association Bankruptcy and Restructuring Committee and past chair of the Bankruptcy Committee for the Seventh Circuit Bar Association. She previously served as ABI’s Vice President-Communications and Information Technology and is the author of ABI’s The Preference Defense Handbook: The Circuits Divided and a co-author of its Interrupted! Understanding Bankruptcy’s Effects on Manufacturing Supply Chains. Judge Thorne is a Fellow of the American College of Bankruptcy. She served as Education Committee chair for the National Conference of Bankruptcy Judges from 2019-20 and as its president from 2021-22. Judge Thorne is included in The Best Lawyers in America in the area of bankruptcy and creditor/debtor rights law, is recognized as a Leading Lawyer in Illinois, and has been recognized by Illinois Super Lawyers every year since 2003. For seven years, she chaired Women Employed, a Chicago nonprofit policy organization focused on improving the lives of low-wage women through enhancing access to post-secondary education and improving job quality. Judge Thorne received her B.A. from Macalester College, her M.A.T. from Duke University and her J.D. with honors from Illinois Institute of Technology Chicago-Kent College of Law.

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