With the recent rise in gas prices and the ripple effect resulting in increased costs of many goods and services, Chapter 13 debtors may very well discover that a payment plan which worked a year ago no longer works at all. Here in Atlanta, we are seeing a significant number of Chapter 13 cases fail when debtors fall behind on their trustee payments and end up with a dismissed case.
What happens if your Chapter 13 case gets dismissed? Can you refile to stop a pending foreclosure?
The short answer is “yes” you can refile unless there a specific order from the bankruptcy judge or in the Bankruptcy Code prohibiting a refile. We sometimes see orders disallowing refiling if the judge holds a hearing and finds that a debtor is abusing the bankruptcy process – for example if co-owners of a house file multiple Chapter 13 cases solely to stop foreclosure. The Bankruptcy Code also disallows a refiling if you have voluntarily dismissed a prior following the filing of a motion for relief (this is one of the reasons why voluntarily dismissing a Chapter 13 case is usually not a good idea).
Being eligible to refile a case is one issue – the automatic stay is another. Refiling may or may not stop a foreclosure. Under the BAPCPA changes to the bankruptcy laws, the automatic stay may be limited or non-existent in a refiled case. Rachel Lynn Foley of the Bankruptcy Law Network discusses the automatic stay rules relating to refiling a Chapter 13 on this informative blog post.
Jonathan Ginsberg, Esq.
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Last modified: October 22, 2012