One of the most powerful tools in bankruptcy is a filer’s ability to stop creditors in their tracks. The automatic stay goes into effect as soon as you file for Chapter 7 or Chapter 13 bankruptcy. Once in place, it prevents most creditors from requesting payment, pursuing legal action—such as a lawsuit—or wage garnishment. It will even stop a pending foreclosure sale.
But the automatic stay isn't absolute. Sometimes the stay lasts for a short time or doesn't apply at all—usually when there have been multiple bankruptcy filings in the recent past. A filer facing this problem can ask the court to extend or reinstate the automatic stay. The court will grant the request if the filer proves good faith by demonstrating that the previous conduct wasn't an attempt to manipulate the system or wrongly avoid paying a creditor.
The court can also lift the automatic stay during the bankruptcy case. Creditors often use the motion procedure when a filer is behind on a mortgage or car payment, arguing that if the debtor can't catch up on the arrears, the foreclosure or repossession should go forward to prevent an unnecessary financial loss to the creditor. Bankruptcy judges routinely grant these motions, as well as requests to lift the automatic stay to allow the continuation of eviction proceedings.