When the Automatic Stay Is Not Automatic: Bankruptcy Court Upholds Foreclosure Sale Under 11 U.S.C. § 109(g)

By: Michael L. Moskowitz, Esq.

In a recent decision from the United States Bankruptcy Court for the Eastern District of New York, In re Frederica West (January 7, 2026; 24-44469), Bankruptcy Judge Elizabeth S. Stong clarified the limits of the automatic stay when a debtor files a repeat bankruptcy case within 180 days after voluntarily dismissing a prior case following a motion for stay relief.

The debtor filed her first Chapter 13 case in January 2024, during which the mortgage servicer sought relief from the automatic stay to proceed with foreclosure. Before that motion was resolved, the debtor voluntarily dismissed her case. Less than three months later—well within the 180-day window set forth in Bankruptcy Code 11 U.S.C. § 109(g)(2)—the debtor filed a second Chapter 13 petition, four days before a scheduled foreclosure sale.

After the second Chapter 13 filing, the secured creditor proceeded with the foreclosure sale without seeking stay relief. The debtor moved to void the sale and sought an award of actual and punitive damages from the secured creditor due to their attorneys alleged willful violation of the automatic stay. Debtor argued the filing triggered the automatic stay and that the foreclosure sale violated 11 U.S.C.§ 362(a).

Judge Stong dismissed debtor’s argument and held Ms. West was statutorily ineligible to be a debtor under 11 U.S.C. § 109(g)(2) because she voluntarily dismissed her prior case after a motion for relief from stay had been filed. As a result, Bankruptcy Code § 362(b)(21) applied, which expressly provides the automatic stay does not operate to bar enforcement of liens against real property when the debtor is ineligible under 11 U.S.C. § 109(g).

The Court also rejected debtor’s reliance on pre-BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act enacted April 20, 2005) case law holding that a subsequent bankruptcy filing is not a “nullity” and automatically invokes the stay. Judge Stong emphasized that 11 U.S.C. § 362(b)(21), enacted as part of BAPCPA, superseded those decisions and created a targeted statutory exception to the automatic stay for ineligible debtors. While acknowledging that seeking court confirmation may be prudent in close cases, the Court made clear that the statute itself does not require a creditor to obtain advance stay relief before proceeding.

The Court concluded the foreclosure sale did not violate the automatic stay, was not void, and did not support an award of actual or punitive damages.

Practice Pointer

In re West provides important guidance for secured creditors confronting repeat bankruptcy filings timed to derail foreclosure sales. When a debtor voluntarily dismisses a prior bankruptcy case after a motion for relief from the automatic stay has been filed, any subsequent filing by the putative debtor within 180 days may render the debtor statutorily ineligible under 11 U.S.C. § 109(g)(2). In that circumstance, Bankruptcy Code § 362(b)(21) supplies a narrow but powerful exception permitting enforcement of liens against real property, notwithstanding the new filing.

At the same time, creditors should proceed with care. While West confirms that Bankruptcy Code § 362(b)(21) is self-executing and does not require advance court approval, close factual questions—such as the timing of the prior dismissal or the scope of the relief sought—may still warrant seeking a comfort order or declaratory relief. Early coordination with bankruptcy counsel remains critical to preserving foreclosure momentum while minimizing risk.

FRB’s Creditors’ Rights & Bankruptcy Practice Group is well-versed in navigating the complexities of the Bankruptcy Code. Should you find yourself facing similar challenges with repeat filers or need guidance on enforcing your rights as a secured creditor, please do not hesitate to contact us for assistance.

DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.