By Ryan C. Wood

The automatic stay is one of the most powerful tools in bankruptcy.  In fact, this is why most people file for bankruptcy protection.  The automatic stay stops all collection activity against you.  This means creditors can no longer call you, send you letters, sue you in court, enforce a judgment against you, garnish your wages, levy your bank account, and place a lien on your house, stop foreclosure proceedings and repossession of vehicles.  Basically, they cannot do anything to collect the debt against you unless they have a security interest in your property.  In the event there is a security interest in your property (like your house or car) the creditors would need to file a motion with the court to lift the automatic stay so they can start or continue the foreclosure or repossession procedures to protect their interest in your property.  Of course, it goes without saying that they can only foreclose or repossess your property if you have not been making payments each month on time.

The automatic stay will take effect as soon as you file for bankruptcy.  It is called the automatic stay because the stay goes into effect automatically – you do not need to do anything other than file your bankruptcy case.  Since this is such a powerful tool against your creditors you need to be sure that you do not abuse this tool.  If you file a second Chapter 7, 11, or 13 bankruptcy case after your first bankruptcy case was dismissed (due to not filing required paperwork, not paying your fees on time, not showing up for the mandatory meeting of creditors and other reasons) within a one year time period you only receive the automatic stay for the first 30 days of your second Chapter 7, 11, or 13 bankruptcy case.  After the 30 days are up you will no longer have protection of the automatic stay to.  In order to prevent the lapse of the automatic stay in your second bankruptcy case you would need to file a motion to extend the automatic stay.  Many of our clients have unfortunately been told by various entities or people to just file they bankruptcy case on their own to stop a foreclosure or eviction.  What they are not told are the consequences of filing multiple bankruptcy cases and how it effects the automatic stay.

If you file a third Chapter 7, 11, or 13 bankruptcy case within a one year period after the first two bankruptcy cases have been dismissed there will be no automatic stay in effect.  This rule was created to prevent people from abusing the automatic stay and continually filing bankruptcy cases to get the automatic stay with no intention of completing the bankruptcy petition or obtaining a discharge of their debts.  You would need to file a motion to impose the automatic stay in order to have the automatic stay imposed in your bankruptcy case.  If you have been advised to just file a bankruptcy case on your own you could be severely limiting your ability to protect your interests and ultimately discharge your debts when filing bankruptcy.