In this sluggish economy, people from various economic backgrounds struggle with burdensome debt. High credit card bills, medical expenses or job loss can cause you to have a disproportionate debt-to-income ratio. Some people turn to bankruptcy to get debt relief. One of the benefits of filing for bankruptcy is that it stops creditor collection actions.
The moment you file a bankruptcy petition, your creditors must cease all collection activity including law suits, garnishments and foreclosures. Usually, the automatic stay protects you from your creditors until the end of your bankruptcy case. The end of your bankruptcy case could be when you get a discharge of your debts or when the court dismisses your case. However, there are a few exceptions where the stay does not go into effect automatically or does not extend beyond 30 days.
- Dismissed case exception — The automatic stay will only be effective for 30 days if, in the previous year, you filed a Chapter 7, 11 or 13 bankruptcy petition and the court dismissed your case. Your current petition must be filed in good faith.
- Multiple filings exception — If you have filed two or more bankruptcy cases in the past year, the automatic stay will not immediately (upon the filing of your bankruptcy petition) protect you from your creditors.
In both situations, the court may grant an extension if you file a motion within 30 days. The key to receiving an extension to the automatic stay is to show that your circumstances have changed. The law presumes that you filed the second bankruptcy case in bad faith. You must prove to the judge that you can successfully complete your new bankruptcy case in order to extend the automatic stay.
Communicating with your attorney is an important part of successfully filing a bankruptcy petition and discharging some or all of your debts. Lansing J. Roy, P.A. can help you navigate the complex bankruptcy process.