Posted on Jan 18, 2014

If you have had two or more bankruptcies dismissed in the year before you filed the current case, there is no automatic stay, according to Section 362(c)(4) of the Bankruptcy Code. If you want a stay, to stop a foreclosure or repossssion for example, you have to ask the Bankruptcy Court for one, and you have to do it within 30 days of filing the later case.

Also, there is a presumption that the later case was not filed in good faith. A debtor has to put on evidence during the stay imposition hearing to overcome the presumption that the later case was not filed in good faith.

In a recent case out of the bankruptcy court in Houston, U.S. Bankruptcy Judge Letitia Paul imposed a stay for a debtor in his 10th bankruptcy case. In re Norris, Case No. 13-36681, in the U.S. Bankruptcy Court, SD Texas, Houston Division.

The debtor had been disabled for some time, and had a dispute with the mortgage holder. There were extenuating circumstances. And the judge found that unlike several of the other cases, this time the debtor had an attorney and the required paperwork had been filed with the court. The court also held:

Debtor's schedules indicate that he has a regular source of income, and that he appears to be able to make the payments called for under the proposed Chapter 13 plan. The court concludes that Debtor has rebutted the presumption that he did not file the instant case in good faith. The court concludes that a stay should be imposed pursuant to Section 362(c)(4)(B).

I would not count on a court being so generous in most cases, but this particular debtor must have really done a good job presenting his case to the court. I recommend that you try to make your bankruptcy filing work, the first time, because each new case (after a prior one was dismissed) is progressively more difficult.

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J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization