Sometimes, people file for bankruptcy on the eve of foreclosure to delay the foreclosure, but they
have no real plan of action to try to save the home or to liquidate their assets to pay their debt.
They simply file the petition and dismiss it later on. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) addressed this situation. The act provides that if a debtor files a new bankruptcy within one year after the dismissal of an earlier case, the automatic stay terminates in the second case 30 days after filing the second case, unless
the debtor proves that the filing was in good faith. Further, if a debtor files a third case within the one year period, the automatic stay does not apply unless the debtor proves that the third case was filed in good faith.
Example: You reside in your home. A foreclosure sale is scheduled next week. You file your first bankruptcy. The automatic stay takes effect when you file the bankruptcy. You do not have to prove anything. The creditor has to go to court to prove why it should be allowed to go
forward with the foreclosure proceeding. Now assume that the case is dismissed and you refile the bankruptcy. Here, the creditor cannot continue with the foreclosure for 30 days but can go forward with it after that time unless you file a motion with the court. Now assume that you dismiss the case again and file it nine months later for the third time. The creditor can move forward with the foreclosure immediately unless you file a motion with the court to enact the
stay and stop the foreclosure. If you are filing your first bankruptcy, the court generally presumes you are filing your bankruptcy in good faith. If you file your second bankruptcy after dismissing the first one, it is up to you to prove you are acting in good faith.
In all of these examples, it is presumed that the Court did not make any findings of bad faith when the debtor's case was dismissed. In the event the Court made a finding that a debtor
dismissed a case in bad faith, Section 109(g) of the Bankruptcy Code provides that a debtor is ineligible to re-file bankruptcy for six months after the dismissal of his or her last bankruptcy. Further, if a creditor files a Motion to Lift the Automatic Stay before a debtor files a Motion to Dismiss his or her case, the debtor cannot re-file the case for six months.
If you are looking for a Naples bankruptcy lawyer because your bankruptcy case was dismissed and you are considering re-filing, contact the Rothrock Law Firm at (239) 206-1948