Losing the “Automatic Stay” through Multiple Filings

Automatic Stay

The “automatic stay” stops creditors from pursuing you and your assets starting as of the moment your bankruptcy case is filed. As long as your case is active, they cannot continue harassing you. This is a tremendously important benefit of bankruptcy. It’s one you certainly don’t want to lose out on.

Unfortunately, some people DO lose out on this benefit of bankruptcy. Imagine going through the process of bankruptcy only to have all of your creditors continue to pursue you. Or imagine if 30 days after filing, your automatic stay protection disappeared all of a sudden and all your creditors were allowed to pursue you again.

Fortunately, you can avoid losing your automatic stay. Here’s how.

Within the Last 12 Months Have You Filed — or Tried to File — a Bankruptcy Case?

Are you thinking about filing bankruptcy and are absolutely sure that you have not had a prior bankruptcy filed in your name in the last 365 days? Specifically, are you sure no such bankruptcy was filed and then dismissed (closed, or terminated), either on your own initiative or by someone else?

If you’re sure, then this automatic stay problem likely does not apply to you. But finish reading this blog post to make sure.

The Multiple Filing Rules

To make sure you don’t have a problem, consider the follow two rules.

Rule # 1: The automatic stay does not go into effect at all when you file a new case IF within the prior year you have filed TWO OR MORE other bankruptcy cases, and those prior cases were dismissed. If that IS your situation, then when your new case is filed the automatic stay does NOT immediately go into affect as it would normally. Instead after your new case is filed the automatic stay MAY still go into effect, but only if we can show the bankruptcy court that you meet certain conditions.

Rule # 2: The automatic stay goes into effect at the filing of your new case, but expires after 30 days IF within the prior year you have filed ONE other bankruptcy case, which was dismissed. If this is your situation, this expiration of the automatic stay may be avoided if before then we can show the court that you meet certain conditions.

The conditions that you have to meet for getting the court to impose or preserve the automatic stay include explaining why the previous case(s) was (were) dismissed and why the present case is being filed.

Was a Bankruptcy Case Definitely Not Filed Earlier?

Think very carefully before assuming that you have not filed a bankruptcy case within the last year. Sometimes people file a case and have it dismissed without even knowing or remembering it!

This usually happens one of two ways.

First, a person files a bankruptcy without an attorney, for whatever reason does not follow through and the court dismisses the case because of the person’s lack of follow-through.

Second, a person hires an attorney, signs some papers and the case gets filed, without the person even realizing it because of some miscommunication. Then the case gets dismissed again for lack of follow-through.

In either situation, many months later the person either doesn’t realize or has forgotten that the case was filed and dismissed.

Its Purpose

This law was designed to prevent serial bankruptcy filings, which were seen as abusive. Before the law went into effect some people would file multiple bankruptcy cases, one after another, usually to use the automatic stay of each new case to repeatedly delay a foreclosure or some other collection action. Automatically taking away the automatic stay was seen as an effective way to discourage serial filings.


Avoid the drastic consequences of losing the automatic stay by:

  1. considering very carefully whether it’s at all possible that within the last year you filed another bankruptcy case; and
  2. then informing your attorney of any possibility that you did.

If you did have a prior case or two filed and dismissed, there’s a good chance that you did so for a legitimate reason. If so, your attorney will likely be able to convince the bankruptcy judge to retain or impose the automatic stay. But that won’t happen unless you tell your attorney about the situation in advance and he or she can assess whether your case would qualify.

If you are in the Dallas-Fort Worth area I can help you with this. I’m Carrie Weir, a Texas bankruptcy attorney serving especially the area around Rockwall, Heath, Greenville, Lavon, Wylie, Mesquite, Royse City, Sachse, and Rowlett. Please get in touch with me for a free and confidential consultation. Call 972-772-3083 or use the contact form here. Thank you.

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