What Can Creditors Take If the Automatic Stay Isn't In Effect?Ĭreditors aren't permitted to garnish or seize assets that are part of the bankruptcy estate. Special rules apply when you dismiss a bankruptcy case after the court grants a mortgage lender's motion to lift the automatic stay.īefore filing multiple bankruptcies, you'll want to talk to a bankruptcy lawyer who can explain the court's likelihood of reinstating the automatic stay. For instance, you won't prevail if you repeatedly filed to stop a mortgage lender from foreclosing on your property. Ultimately, the court doesn't want to reward repeat filings that hold a particular creditor at bay. You'll also have a good argument if you show the dismissal was due to your attorney's error, not your own. The court will probably extend the automatic stay if there's no evidence of bad faith. You demonstrate that you didn't purposefully fail to file the documents to force a dismissal. Suppose the bankruptcy court dismissed your previous bankruptcy because you didn't timely file required bankruptcy documents. To prevail, you must present clear and convincing evidence of good-faith bankruptcy filings.

You can file a motion asking the court to instate the automatic stay. Can I Ask the Bankruptcy Court to Impose or Extend the Automatic Stay? Chapter 13 filers risk virtually nothing by filing in bad faith because Chapter 13 trustees don't sell property. Unlike Chapter 7 filers, Chapter 13 filers can dismiss matters without court approval. The Chapter 7 filer's case will move forward with the Chapter 7 trustee selling assets the filer can't protect. In Chapter 7, the bankruptcy court reviews a filer's dismissal request and will deny it if it appears to be a bad-faith filing. Unlike Chapter 7 filers, Chapter 13 filers can dismiss a bankruptcy case without approval from the bankruptcy court. Does Automatic Stay Abuse Occur More Frequently in Chapter 7 or 13 Cases?īad faith filings occur with much greater frequency in Chapter 13 cases. However, the automatic stay won't apply if your spouse filed multiple cases within the same year. While your automatic stay might be restricted, your spouse will be entitled to automatic stay protection. The automatic stay restrictions will apply to you only. Suppose you file a joint bankruptcy with your spouse within the same year of filing an individual bankruptcy the court dismissed-what will happen then? Joint Bankruptcy Filings: Your Spouse Gets the Automatic Stay Benefit If you file three bankruptcies within the same year, the presumption of bad faith exists. Three Bankruptcies Within One Year: No Automatic Stay The automatic stay will expire after only 30 days. If you file a second bankruptcy within one year of dismissing the first, the presumption is you filed the second case in bad faith. Two Bankruptcies Within One Year: Stay Limited to 30 Days When Does the Automatic Stay Exception Apply to Repeat Filings?Īutomatic stay protection could be limited or unavailable if you file more than once in 365 days. The resulting delays unfairly harm creditors with valid payment and property claims.

The bankruptcy court views bankruptcy manipulation as a bad faith abuse of the bankruptcy process. Repeat filers often have no intention of using bankruptcy to fix financial problems-many can't qualify for Chapter 13 (we explain why bad-faith filers frequently use Chapter 13 below). The rules prevent filers from repeatedly dismissing bankruptcy cases and exploiting the automatic stay's ability to stop foreclosure, repossession, lawsuits, and other collection actions. Why Won't the Bankruptcy Court Order the Automatic Stay for Repeat Filings? Learn how the automatic stay can help you stop foreclosure and keep a house in bankruptcy. However, if you file for bankruptcy too often, you won't receive the automatic stay's protection. Once activated, creditors can't contact you, bill or sue you, or undertake other collection activities, like repossessing property or garnishing wages. The bankruptcy court puts the automatic stay in place immediately after you file your bankruptcy case.

The automatic stay prevents creditors from collecting debts from you during a bankruptcy case. It's one of the primary bankruptcy benefits. You'll need to file for bankruptcy to receive the automatic stay's protection. How Do I Get the Relief the Automatic Stay Provides?

Take a short, ten-question quiz to learn whether you have complicated issues and should hire a bankruptcy lawyer.

Learn about timing your bankruptcy and when you'll want to delay or avoid filing.

Find out how Chapter 13 solves more problems than Chapter 7.

See if you qualify to erase debt in a Chapter 7 case.

Learn what you should know about filing for bankruptcy.

Trustee motion to dismiss chapter 13