You Get Less Bankruptcy Protection Each Time You File


Filing for bankruptcy may sound like a solution to your financial problems, and it can be.  But if you don’t follow the rules – and there are many – you could find yourself making costly mistakes.

The result?

The court could dismiss your bankruptcy and you lose the law’s protections.

Still – unless there’s a court order forbidding you from filing again – you may file for bankruptcy a second time.  And even a third.  But each time you file, you get less protection. 

The first time you file – if it’s your first filing in one year – the court issues an automatic stay on collection efforts against you.  This stay lasts until you get a discharge from the bankruptcy court – or until a creditor gets relief from the stay, which could be granted by the court.

If your bankruptcy filing is the second within one year, the court’s automatic stay lasts only 30 days, unless the bankruptcy court extends it.

If your bankruptcy filing is the third within one year, the court does not issue an automatic stay.   In this case, you must ask the court to impose a stay – and the court must grant your request. 

If the court does not grant you an automatic stay – or if the stay ends after 30 days – collection actions against you can continue, including efforts to foreclose on your home.  So if you want your bankruptcy to stop foreclosure activities, make sure your bankruptcy is the first one you’ve filed within one year.

In addition, bankruptcy courts will discharge your debts only under certain conditions.  One of those conditions is the type of bankruptcy you filed first, and the type you’re filing second. 

As you can imagine, the rules and laws surrounding bankruptcy are complex and you should not go forward without a skilled bankruptcy lawyer representing you.  If you’re filing for the second or third time within one year, make sure you tell your lawyer so he can evaluate your case and explain the consequences of these later filings.

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