Wait! Stop! I Filed Bankruptcy (again).

14 Mar Wait! Stop! I Filed Bankruptcy (again).

Need protection of the bankruptcy automatic stay, but you’ve filed for bankruptcy before? There are complex rules that cover when you are protected and when you are not.

Safe At The Plate

Generally speaking every bankruptcy filing results in a stay of all actions against you automatically. {You can read the code section – 11 U.S.C. §362] You don’t need to do anything to get that protection. But you can lose it very quickly. There are exceptions to every rule so even if you are filing for bankruptcy the very first time, a bankruptcy will not stop criminal proceedings or family proceedings involving paternity, support, custody, dissolution of marriage or domestic violence.

One Ball, One Strike

You can lose the automatic stay if you have had one case dismissed for cause within the previous year, your protection ends at 30 days unless you file a motion to continue the stay. That motion must be filed and heard within the first 30 days of the case or the Court loses any ability to extend the stay. So if this is the case, get hopping!

2 Strikes And You’re Out!

Likewise, if you are a repeat filer and have had two cases dismissed within the previous year, there is no stay at all. If you want to gain the protection of a stay in bankruptcy, then you must file a motion with the Court to show that the protection is needed in good faith.

Suspended For The Game

Similar to the lack of protection for repeat filers, you can also be prevented from filing at all. In my district especially, but other districts are similar, a repeat filer can be ordered not to file another case at all for a period of time, usually 180 days (six months). This is called dismissal with prejudice. In cases where a piece of property in foreclosure is repeatedly the subject of a bankruptcy filing, I have seen a Court enter an “in rem” order providing that no case involving that piece of property be filed of period of time.

Saved At The Plate

Some courts have helped debtors in repeat cases by holding that even though the automatic stay is not effective against the filing debtor, it is in place as to property of the estate. This means that while creditors might be able to pursue you personally, they can’t touch anything you own which has become part of your bankruptcy case. In at least one case, a court has protected a spouse who is filing for the first time with a repeat filer.

“ConnecticutGene Melchionne is a bankruptcy lawyer covering the entire State of Connecticut. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

“ConnecticutGene Melchionne is a bankruptcy lawyer covering the entire State of Connecticut. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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