When individuals file for bankruptcy, something invisible yet incredibly resilient occurs. It serves to deflect the attempts by creditors and bill collectors to collect money owed by a debtor for services rendered or goods received.

An important element of bankruptcy law is known as the ‘automatic stay.’ The ‘stay’ basically acts like Teflon against attempts to collect debts allegedly owed by a debtor.  In a standard bankruptcy, the automatic stay remains in effect during the entire pendency of a bankruptcy.  However, exceptions to that norm were enacted when Congress overhauled the U.S. Bankruptcy Code in 2005.

As Congress contemplated how to tweak the laws about automatic stays, the general consensus was to write a law that would deter debtors from filing and dismissing a bankruptcy just to benefit from the protections afforded by the automatic stay.

So now, when a debtor files for bankruptcy, if it’s the first time that case was filed, the bankruptcy receives a complete automatic stay. However, say a debtor (individual) filed for bankruptcy within the last year and the case was dismissed prior to discharge, whether that occurred because the debtor requested it or the court ordered it. If that case is refilled within a year, it will enjoy an automatic stay of 30 days.

If a debtor files and dismisses the same case several times, the case will not benefit from an automatic stay at all. Congress wanted to ensure that debtors are not abusing the privilege of the automatic stay, so it decided there are situations when a bankruptcy filing does not benefit from an automatic stay, at all.

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For more information or to schedule an appointment with a caring and compassionate bankruptcy lawyer, please contact Taieb Law.

We are a debt relief agency and are pleased to help clients file for bankruptcy relief under the U.S. Bankruptcy Code.