Bankruptcy expert Leon Bayer answers real-life questions.
I need to file a bankruptcy case to stop the foreclosure of my home. But there’s a catch. I already filed two Chapter 13 bankruptcy cases in the past ten months and both were dismissed. The first because of some bad advice I got. The second because I
found out too late that I needed to file a motion to continue the protection of the automatic stay within 30 days.
The foreclosure is back on track and I need to stop it so that I can save my home. I’m handling the bankruptcy on my own.
So here’s my question. Since I didn’t use up my right to file a motion to continue the stay in the second bankruptcy, can I file another Chapter 13 case and also file the motion? It seems to me that my right to file the motion is preserved because I haven’t exercised it yet.
You don’t preserve your right to ask the court to continue the automatic stay by not using it. It’s a “use it or lose it” right during bankruptcy case number two. However, you may be able to get the court to impose a stay as to your lender in the third bankruptcy. Whether this will work depends on how much time you have before your home is foreclosed.
Here’s a bit more about repeat bankruptcy filings and the automatic stay.
The Automatic Stay in Your First Bankruptcy Case
As you correctly understand, only the filing of your first bankruptcy case created an automatic stay. Under the automatic stay, most creditors must stop collection activities during your bankruptcy. That automatic stay encompasses foreclosures – so your lender had to stop the foreclosure proceedings when you filed the first case. (To learn more, see Nolo’s article Bankruptcy’s Automatic Stay.)
The Automatic Stay in Your Second Bankruptcy Case
If you file a second bankruptcy case within one year from the filing of the first, the automatic stay only lasts 30 days. The court can extend the 30 days, but you have to file a motion asking the court to do so. In order to get the extension, you have to convince the court that you filed your second case in good faith as to creditors you are trying to encompass under the extension.
The court will only grant such an order during the first 30 days of case number two. This doesn’t leave you much time (as you found out). Experienced bankruptcy lawyers normally file an emergency motion to extend the stay on the same day as the second case is filed. Doing that provides the best chance of having the court consider the motion before expiration of the deadline.
The Automatic Stay in Your Third Bankruptcy Case
If you file for bankruptcy a third time within one year, the automatic stay doesn’t kick in at all. You can, however, ask the court to impose the automatic stay. Again, you’ll have to do this by motion and you’ll only have 30 days to get the order.
If you haven’t yet filed your third bankruptcy case, consider talking to a bankruptcy lawyer. An experienced lawyer may be able to file the motion requesting the automatic stay along with your bankruptcy case, and get the motion heard before 30 days have passed. You’ll have to convince the court that you haven’t filed your third case in bad faith. (Learn more about the automatic stay in repeat bankruptcy filings.)
Whether this strategy will work depends on when the foreclosure sale is scheduled. If the sale is scheduled to take place in less than 30 days, you’ll be out of luck.
Leon Bayer is a Los Angeles bankruptcy attorney. He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy. The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo. By answering a question on this blog, Mr. Bayer does not become your lawyer.