Hopefully, filing for bankruptcy relief is something that you may only need to do once, but that isn’t always the case. Suppose you’ve been in Chapter 13 Reorganization bankruptcy case. Maybe you or your spouse has lost your job or you’ve just had some unexpected medical expenses come up and you were unable to make your Chapter 13 plan payments to the Court. Usually, the Court will give you some time to resume making payments, but eventually, with no payments coming in, your case will be dismissed.
Filing Bankruptcy After a Discharge
It is fairly common belief that after completing a bankruptcy case, a person must wait a number of years before they are eligible to file again. There is some truth to this belief, but in reality things are a little more complicated. The law says that a person who has received a “discharge” in bankruptcy must wait several years before being eligible for discharge in another case. However, if you were in a Chapter 13 case that was dismissed before you received a discharge, then this limitation doesn’t apply. You would be free to refile immediately. If you haven’t fully recovered financially from the circumstances that caused your Chapter 13 to be dismissed, then you may want to consider filing a Chapter 7 case, or “straight bankruptcy.” You would be eligible for a Chapter 7 discharge even if you filed right after your Chapter 13 was dismissed.
If your finances have recovered, then you can refile a new Chapter 13 case without having to wait years. However, this is a little more complicated. Normally when you file a bankruptcy case you are automatically protected by the “automatic stay.” This is the part of the Bankruptcy Code that says none of your creditors can take any action against you to try to collect a debt. Unless the Judge enters a specific order changing the protection, the automatic stay lasts the entire length of your case. But, if you’ve had a bankruptcy case pending within the last year, and you refile, then the automatic stay will only last 30 days. After that time, the protection will stop and your creditors will once again be able to contact you directly and potentially try to sue you or garnish your wages.
File Motion to Extend Automatic Stay
To prevent this from happening, you can file a motion with the Court asking the Judge to extend the automatic stay to cover you for the entire case. The Judge will most likely hold a hearing on the motion and you would need to appear in Court. The Judge will ask you to explain your situation and tell him what happened that made it impossible for you to finish your last case and why you believe you will successfully complete your case this time. If the Judge is confident that your second case was filed in good faith, then he can extend the automatic stay.
If you have had 2 cases within the past year and file a 3rd case, then the automatic stay won’t take effect at all unless you file a motion asking the Judge to put the stay in place. After a hearing, the Judge will decide what he thinks is appropriate going forward.
As you can tell from this explanation, refiling a bankruptcy case takes specific knowledge of the details of the Bankruptcy Code and court procedures to give your case the best chance for success. If you have tried to file a bankruptcy case without the help of an experienced bankruptcy attorney and your case has been dismissed, please don’t refile until you’ve spoken with an attorney! At our Bond & Botes affiliated offices we offer free initial consultations. If you need to refile a bankruptcy case or are considering filing for the first time, please contact us to discuss your situation. Our attorneys have years of experience helping people through all aspects of the bankruptcy process.
Nick Gajewski is an Associate Attorney at the Bond & Botes Law Offices in Florence and Haleyville, Alabama. He holds a Bachelor of Arts from the University of Alabama, and a Juris Doctorate from the University of Alabama School of Law. Nick joined the team of Bond & Botes bankruptcy lawyers back in 2014 and has been helping clients navigate financial issues since. Read his full bio here.