A compulsory residence clause of the bankruptcy law prevents certain types of debt collection practices for creditors such as payment demands, defaults, foreclosures, evictions, or litigation. Except in rare cases, the automatic stay is significant when the bankruptcy is filed.

Since borrowers prefer to wait for the last minute, foreclosures frequently occur just before the auction hour. Often it was a sprint to court in the past: the bank secretary raced to the district court to finish the mortgage sale while the borrower’s lawyer hurried to the federal court to file for bankruptcy.

Lenders still have to face court to sell, but the overwhelming majority of bankruptcy cases are filed online. And with the auction, a bankruptcy motion will postpone the sale of the loan as long as the trustee files the bankruptcy case before a foreclosure sales (or, in some instances, the bank’s foreclosure certificate in the county land registry).

The bankruptcy of both Chapter 7 and Chapter 13 trigger automatic stay and stop foreclosure. However, the presentation of an issue under Chapter 7 only offers temporary relief when stays are lifted after the court concludes the proceedings, typically 4 to 6 months after filing. To find a more permanent solution, you will need to file a lawsuit under Chapter 13.

In the past, people have used auto stays to keep the lender from constantly forfeiting. The legislator has updated bankruptcy legislation to ensure that automatic stays for creditors with more than one case in a year are not so intuitive. The current system works like this:

If you file again for bankruptcy less than one year after a previous case, the automatic residence will only remain valid for 30 days unless the court allows an extension.

If the two cases pending in the previous year, a new bankruptcy case is filed, the automatic residence will not take effect until the court decides.