Before 2005 debtors often became serial filers of Chapter 13. Faced with an imminent mortgage foreclosure they would file Chapter 13 to stop the foreclosure. The bank would get relief from the automatic stay or the Chapter 13 would be dismissed for nonpayment to the trustee and foreclosure would start again. Days before the sale the debtor would file a second Chapter 13. There were cases of these serial filings continuing for years, all the time allowing the debtor to remain in the house without making payments.
To rectify this situation the 2005 amendments to the Bankruptcy Code modified how the automatic stay is imposed. Under prior law the automatic stay went into effect upon the filing of the petition. This is what allowed the serial filings to succeed. Under the amendments, the automatic stay goes into effect on the first filing and remains unless and until lifted by court order. This is the same as it was originally. However, upon a subsequent filing within one year of the original filing, the stay goes into effect but remains only for 30 days unless the debtor requests and obtains an extension of the stay. If there is a third filing, there is no automatic stay. Instead, the debtor has to proactively request the imposition of a stay. Furthermore, there is a presumption that a second or later filing within one year of the original filing is made in bad faith.
The bottom line is, if you’re filing Chapter 13 to stop a mortgage foreclosure, be certain you can see it through.