Automatic Stay

Automatic Stay Generally

The Automatic Stay in bankruptcy is created by Bankruptcy Code s. 363 and prohibits most actions to enforce, collect, recover against the debtor or assets of the debtor or of the bankruptcy estate. Different portions of the Code refer to "assets of the debtor" and "assets of the estate" to distinguish and permit certain acts as to assets that have been released from the bankrupcty estate. So careful reading is required.

We are frequently asked "May we file a mortgage or deed of trust after bankruptcy has been filed in light of this language "(4)any act to create, perfect, or enforce any lien against property of the estate" in 362(a)(4)"? There is an exception to this under 362(b)(3)

Automatic Stay Limited on Repeat Filers

If the same party has been a debtor (or joint debtor) in a prior bankruptcy case which was dismissed or withdrawn within the year before the new bankruptcy case is filed (other than a refiling under a different chapter), the automatic bankruptcy stay will terminate 30 days of the filing of the new case, unless:

1) motion is filed for an order extending the stay; 2) the request is filed with the bankruptcy court before the expiration of the 30 days, and 3) the court grants the motion and extends the stay within 30 days after case commencement. This motion requires a “good faith” showing. Sec. 363(c)(3)

If there have been two or more bankruptcy cases dismissed within the last year, no automatic stay goes into effect and no stay will go into effect unless the court affirmatively orders a stay as to some or all creditors. Sec 363(c)(4)