How Long Does the Automatic Stay Last?

A creditor violates the automatic stay when it contacts the debtor during a bankruptcy case. Getty Images

In The Automatic Stay: How it Protects You When You File Bankruptcy we explain that the automatic stay is an injunction against creditor actions during a bankruptcy case. We also discuss the actions that are prohibited and the actions that are not prohibited.

In this article we talk about when the stay is effective, when it is not effective and when it expires.

The Automatic Stay is Effective When the Case is Filed.

In most cases, the stay against creditor action goes into effect at the moment someone files a bankruptcy case, no matter the type of bankruptcy.

The term “automatic” refers to the fact that the stay usually requires no court action to go into effect. In fact, while it is usually automatic,

See Are You a Creditor? Don't Do This In a Bankruptcy Case.

Exceptions to the Rule: Serial Filings

It is possible to have more than one case pending during any twelve month period. Sometimes, it might be a good tactical move to follow a Chapter 7 discharge with a Chapter 13 filing to protect a house or a car. Sometimes, a debtor will be unable to keep up payments in a Chapter 13 case, let the case be dismissed, then refile soon after. These are called serial filings.

  • Two Cases in One Year: If you have had one bankruptcy case pending during the previous year, and then file a second one, the stay will only last for thirty days in the second case unless you ask the court to extend it.
  • Three Cases in One Year: If you have had two bankruptcy cases pending during the previous year, the stay will not go into effect at all when you file the third case. To remedy that, you can file a motion, set a hearing, and try to convince the judge that filing three cases is reasonable for your circumstances, that you're not trying to take advantage of your creditors or abuse the bankruptcy system, and that you deserve the automatic stay. 

    When the Automatic Stay Terminates

    The length of the automatic stay depends on whether it applies to collection activity against the debtor or against the debtor’s property. 

    • For Collection Activity Directed Toward the Debtor Personally

    As to the debtor, the automatic stay generally lasts until the debtor receives a discharge. At that point, creditors can re-commence collection activity on debts that are not discharged. For debts that are discharged, another injunction goes into effect called the discharge injunction.

    • For Collection Activity Directed Toward Property

    It is possible for a creditor to take action against the debtor’s property even if the automatic stay is still in effect as to the debtor personally.

    Even if you file bankruptcy, the lender is entitled to either payment of the value of the collateral or the collateral itself. When you file a Chapter 7 bankruptcy case, among the many documents you provide is a Statement of Intention that tells the court and your creditors whether you will surrender or redeem the collateral or reaffirm the debt. You must file the Statement of Intention within 30 days of filing the bankruptcy case. If you fail to file the statement on time, the automatic stay automatically lifts on Day 31.

    The creditor is then free to proceed with repossession or any other lawful collection activity against that collateral.

    Otherwise, the automatic stay will terminate automatically 30 to 45 days after the meeting of creditors with respect to the collateral (the Bankruptcy Code is unclear on whether the correct timing is 30 or 45 days). Therefore, if you intend to keep the property, you need to either redeem or reaffirm before 30 days has run.   

    If a creditor or collector is too zealous and continues collection efforts after your bankruptcy is filed, you have recourse to stop it and be reimbursed any damages you suffer. Read more at Your Rights When a Creditor Violates the Automatic Stay.

    To learn more about what creditors can and cannot do in a bankruptcy case, see Are You a Creditor? Don't Do This In a Bankruptcy Case.