January 23, 2017
When a chapter 13 bankruptcy is filed, it is often in order to stop ongoing collection efforts such as garnishment of wages, prevent or recover repossession of a vehicle, or to prevent the foreclosure of your home. Sometimes however, despite best efforts, circumstances can change and result in lost income.
Take, for instance, the loss of a job. A successful chapter 13 plan typically requires you to make consistent payments toward the Plan. A job loss can make this difficult and potentially impossible. If income is reduced while you are in a chapter 13, you may still be able to file plan amendments to reduce payments and keep the plan going. Sometimes however, you are not able to maintain payments at a level to keep the chapter 13 in place. This typically leads to the dismissal of your case. If your Chapter 13 is dismissed, your creditors will be able to pursue you again for the debts you owe.
One option that is sometimes available is to re-file a new chapter 13. This might be the case if you regain income after your case is dismissed, or circumstances have otherwise changed. A Chapter 7 may also be an option as well to discharge your debts. However, if a new case is filed after a previous case is dismissed, there are certain restrictions that might apply.
The Automatic Stay, in basic terms, is the protection you receive when you file for bankruptcy. It prevents your creditors from taking further collection action against you.
Section 362 (c)(3) of the Federal Bankruptcy Code sets forth certain restrictions on cases filed after a previous case dismissal. For example, if you are in a bankruptcy case that was dismissed within the 1-year period of filing another case under a chapter 7, 11, or 13, then you are only entitled to receive the protection of bankruptcy (Automatic Stay) for 30 days from the date you file, unless your attorney files a motion to extend the stay. It is very common for the Automatic Stay to be extended in chapter 13 cases filed after a previous dismissal, but it does require that your attorney move quickly to receive the Order extending the Stay prior to the expiration of 30 days.
If you are re-filing a Chapter 7 after a Chapter 13 has been dismissed, then this time-limit may not be of significant concern because you will typically receive a discharge in a relatively short time period. Once the discharge is received collection must be stopped.
There are a number of limits and specific restrictions on extending the Automatic Stay in a new bankruptcy case, such as a case that was previously dismissed with prejudice. If you face this situation, you should meet with an attorney to review your options and ensure the Automatic Stay is available in your specific circumstance.