Third Filing -- No Automatic Stay at All

When No Stay Applies

Section 362(c)(4) provides that if a debtor had two or more bankruptcy cases pending within the 1-year period before the current filing, the automatic stay does not go into effect at all in the new case.

This is the nuclear option. Without an automatic stay, creditors can continue foreclosure, repossession, wage garnishment, lawsuits, and all other collection activity as if the bankruptcy had never been filed. The filing itself provides zero protection.

How to Get a Stay Imposed

The debtor can file a motion within 30 days of the petition date asking the court to impose a stay. The debtor must demonstrate by clear and convincing evidence that the new case was filed in good faith as to the creditors to be stayed.

This is a high burden. The court must find that:

• There has been a substantial change in the debtor's financial or personal affairs since the prior cases
• The debtor can demonstrate ability to complete the case (confirm a plan, complete Chapter 7 requirements)
• The filing is not primarily to delay or frustrate creditors

Common Scenarios

Foreclosure delay pattern

The most common pattern triggering 362(c)(4) is repeated filings to delay foreclosure. A debtor files Chapter 13, the case is dismissed for failure to make payments, they file again, it gets dismissed again, and they file a third time. Courts are very skeptical of this pattern.

Legitimate reasons for multiple filings

Sometimes multiple filings have legitimate explanations: an attorney-caused dismissal followed by a pro se attempt, a job loss during a Chapter 13 plan requiring conversion, or a change in circumstances requiring a different chapter. Courts can distinguish between abuse and legitimate need.

Strategic Considerations

If you are facing a 362(c)(4) situation, consult with a bankruptcy attorney before filing. The motion to impose a stay must be filed quickly (within 30 days) and must be supported by evidence. Some strategies include:

• Wait until the 1-year window closes -- If possible, wait until 1 year has passed since your last two cases were pending
• Prepare the motion in advance -- Have the motion to impose a stay ready to file simultaneously with the petition
• Document changed circumstances -- Gather evidence of new employment, changed income, medical recovery, or other changes