A vexing issue for some creditors arises when an individual who is typically a guarantor or co-debtor of his wholly-owned company’s debt files bankruptcy under chapter 7, 11 or 13 and then takes the position that the automatic stay thereby imposed applies to stay actions against his or her wholly-owned corporation or limited liability company. Whether it involves a pending foreclosure action against the individual debtor’s entity or simply an action to collect a debt, confronting a claim that one is violating the automatic stay naturally gives pause in proceeding with further activity.
