Prior Bankruptcy Dismissals and the Automatic Stay

When a person files bankruptcy, the automatic stay immediately becomes effective. The automatic stay protects a debtor and his property from the collection efforts of creditors. However, dismissal of previous cases can impact whether and the extent to which the automatic stay protects a debtor in a subsequent bankruptcy filing.

Prior Case Dismissed within Previous Year

The Bankruptcy Code limits the automatic stay protection of Chapter 7 and Chapter 13 debtors who have had a case dismissed within the one year period preceding the current filing. In such cases, the stay expires 30 days after the case is filed unless the court extends the stay after a showing by the debtor that the case was filed in good faith.

Two or More Cases Dismissed within Previous Year

If a Chapter 7 or Chapter 13 debtor has had two or more cases dismissed within the previous year, the automatic stay does not go into effect unless the previous case was dismissed as a result of the debtor’s inability to pass the median income and means tests. In such cases, the debtor or any party in interest may, within 30 days of the filing of the bankruptcy petition, file a motion seeking imposition of the automatic stay. After notice and a hearing, the bankruptcy court may impose the automatic stay as to some or all of the creditors, subject to any limitations it deems appropriate, if the debtor is able to demonstrate that the case was filed in good faith.

Presumption That Case Refiled in Bad Faith

A case is presumed to have been filed in bad faith as to all creditors if any of the following are true:

More than one case involving the debtor was filed in the year preceding the current case;
A case was dismissed because the debtor failed to file required documents without substantial cause;
A case was dismissed as a result of the debtors failure to make adequate protection payments as ordered by the bankruptcy court;
The debtor failed to comply with the terms of a confirmed Chapter 13 plan; or
The debtor’s circumstances have not substantially changed so as to indicate an ability to successfully complete a Chapter 7 or Chapter 13 case.

A debtor may overcome the presumption that the case was refiled in bad faith by presenting clear and convincing evidence that he refiled in good faith.

Voluntary Dismissal after Filing of Motion for Relief from Stay by Creditor

If a debtor voluntarily dismissed a case after a creditor filed a Motion for Relief from Stay, he may not file another case for 180 days. If a debtor refiles within that 180 day period, the automatic stay does not prevent a creditor from enforcing a lien or security interest in real property.

Get Legal Help

If you represented yourself in a previous bankruptcy case which was dismissed, you should consult with a qualified bankruptcy attorney before refilling. A bankruptcy attorney will review the circumstances of the dismissal and advise you of its impact on the automatic stay if you refile.

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