Bankruptcy Filings

Can You Lose The “Automatic Stay” Bankruptcy Protection?

One of the most essential and urgent benefits of declaring bankruptcy is the automatic stay. This provision is in place to prevent creditors from pursuing you and your assets as soon as your bankruptcy case is filed. It also typically prevents them from doing so while your case is still open. As such, all collection calls must be stopped, garnishments must be halted, and foreclosures must be put on hold until the case is discharged or dismissed, whichever is applicable.

You don’t want to miss out on this vital benefit of bankruptcy — especially if you lose it suddenly just when you need it.

If you’ve previously filed and dismissed a bankruptcy case or two, there is a likelihood you did so for a justifiable cause. If this is the case, a Monroe bankruptcy attorney from E. Orum Young Law Offices can petition the bankruptcy judge to uphold or enforce the automatic stay in your case.

When it comes to money, E. Orum Young is here to help you navigate your way toward a brighter financial future. We handle each one of our clients and bankruptcy cases with the greatest care, confidentiality, and respect. Our experienced bankruptcy lawyers in Monroe, LA work diligently to get to know you, your case, and your objectives and use these information to help you win your legal case and move you closer to financial freedom.

Losing The Protection Of Automatic Stay

You can declare yourself bankrupt and still lose this protection 30 days later basically without notice. The issue at hand is whether you are presently considering bankruptcy and have already filed a bankruptcy petition within the past 365 days, which was later dismissed. (Check out United States Bankruptcy Code Section 362(c)(3).)

If you haven’t even considered or taken any step to filing a case in the previous 365 days, this issue most certainly does not apply to you. But proceed with caution. We’ve encountered cases where a previous petition for bankruptcy was filed and dismissed without the debtor being completely aware of it at the time, and therefore not remembering it afterward when filing another case.

Avoid Losing the Automatic Stay Protection 30 Days After Filing Bankruptcy

Let’s assume you filed for bankruptcy around ten months ago. However, you quickly paid in full the debt that had forced you into bankruptcy. So, you didn’t pursue your bankruptcy case any further, and the case was dismissed.

Many months later, another creditor is giving you major problems, so you file for bankruptcy once again. Because you didn’t follow through on the previous case, you don’t consider it a valid bankruptcy petition, and you see the new case as your first bankruptcy filing. You may even inform your bankruptcy attorney about the previous petition.

That, unfortunately, would be a mistake. As a consequence, the automatic stay would take effect immediately with the current bankruptcy filing, as is customary. The automatic stay, however, would expire after 30 days unless you and your counsel showed the bankruptcy court that you meet certain conditions.

These conditions include explaining why the earlier bankruptcy case was dismissed and why the current one is being filed. You may be able to justify filing a second case within a year, depending on the specific circumstance. These circumstances include the grounds for the previous case’s dismissal as well as financial developments between the previous filing and the current one. (See Section 362(c)(3) once again.)

If you fail to persuade the court, you will be subject to continued debt collection from 30 days after filing until the debts are discharged two to three months later. That would result in an unforeseen mess, and most likely a costly one.

Two Bankruptcy Filings Within A Year: Automatic Stay Protection Is Limited To 30 Days

If you declare bankruptcy and subsequently file bankruptcy again within one year after the dismissal of the first, there is a presumption that you did so in bad faith, and the automatic stay protection will expire after just 30 days (11 U.S.C. 362(c)(3)).

The court may extend the automatic stay if you can show that you filed the second petition in good faith. To do so, you must submit a motion and provide clear and convincing proof to the court that you filed the most recent petition in good faith.

Three Bankruptcies in a Single Year: No Automatic Stay Protection

If two or more bankruptcies were filed in the previous year and subsequently filed a third, that very same presumption of bad faith remains, and the automatic stay will not apply at all upon the third filing (11 U.S.C. 362(c)(4)). You may petition the court to impose the automatic stay, but you must offer clear and compelling proof that you filed the most recent bankruptcy petition in good faith.

Joint Bankruptcy Filings Of A Married Couple

If an individual bankruptcy was filed that was subsequently dismissed, and then you filed a joint petition in bankruptcy with your spouse during the same year, the restrictions on the automatic stay will only apply to you. This means that, although your automatic stay protection may be restricted, your spouse will be granted the automatic stay protection unless he or she has already filed within the same year.

Stop Creditor Harassment!

Don’t let your creditors harass you or treat you with disrespect while you’re going through bankruptcy. If you need legal help or need more bankruptcy information, please contact our Monroe bankruptcy attorney right away. 

Every bankruptcy lawyer at E. Orum Young bankruptcy law firm is a member of both the Louisiana State Bar Association and the National Association of Consumer Bankruptcy Attorneys.  Don’t face your financial difficulties alone! Contact us immediately or fill out our online contact form to find out which bankruptcy type is best for you, how to file bankruptcy, what legal solutions you have for debt-relief, how to handle your assets and liabilities, and how to have a fresh start in life. Free legal consultation at E. Orum Young Law Offices is the first step towards financial independence. Get in touch with us now!