Ordinarily, when you file bankruptcy for the first time, the stay against collection activity is automatic and lasts for the entirety of your case. The stay stops most types of actions against you, including a home foreclosure, a wage garnishment, or other proceedings. If you are trying to stop a foreclosure of your home, the bankruptcy stay can permanently stop the foreclosure, even if your case is filed on the eve of a sale date.
Bankruptcy Stay In a Repeat Filing May Terminate or Not Exist
In a repeat filing, the bankruptcy stay, which usually is automatic and lasts for the duration of your case, may terminate sooner than it would if it was the first time you were filing, or the stay may not even exist at all. Hence, a repeat filing may not stop a foreclosure of your home or stop a wage garnishment or other collection activity. This is because in an effort to curb abusive filings, the bankruptcy laws have been amended to place limits on the available protections in a repeat bankruptcy filing. Once such limit is the limit on the duration of the automatic stay.
2nd Time Filing
But if you have filed before, and are now filing for a second time within a one year time frame, the stay will terminate 30 days after your case is filed. That means that on the 31st day after your bankruptcy filing, your lender can proceed with a foreclosure of your home, or garnishment of your wages, or other collection activity.
3rd Time Filing
If you have filed twice before, and are now filing for a third time within a one year period, the then generally the automatic stay does not even exist. There is no stay at all and a foreclosure or other collection activity can proceed. Under appropriate circumstances, your lawyer could file a motion to impose a stay, however if you are facing a foreclosure sale date, you could risk losing your home to foreclosure pending the granting of your motion.
Extending or Imposing Stay
Under appropriate circumstances, in a repeat bankruptcy filing, your attorney can obtain a court order extending the automatic stay in a 2nd filing or imposing a stay if none exists due to a 3rd filing within a one year period. Such an order is obtained by filing a special request, called a motion, asking that the court continue the stay for the entirety of your case in a 2nd filing or to impose a stay in a 3rd filing.
Good Faith Required to Extend or Impose
As far as the proper circumstances for filing a motion and obtaining an order extending the stay in a 2nd filing or imposing a stay in a 3rd filing within one year, you must generally show that your repeat filings are not part of a bad faith scheme to simply delay the foreclosure sale date, which is not a good faith reason for filing. For example, if your prior case was dismissed because you had lost your job and could not pay your trustee payments and you are now employed, you could make a case that your repeat filing is in good faith.
Most Lenders Still Request Relief from Stay
Now, most lenders will not foreclose on your home during an active bankruptcy case without obtaining relief from the stay or a court order that no stay is in effect. The more likely scenario is that your lender or creditor will obtain an order granting relief from the stay and further ordering that in any future bankruptcy filings the stay does not apply. That way, your lenders or creditors can proceed with foreclosure or collection with the peace of mind that the court is authorizing them to move forward and enforce their claims notwithstanding your bankruptcy filing.