Been There, Done That: Limitations on Multiple Bankruptcy Filings

Bankruptcy is intended to be a thoughtfully considered, carefully implemented federal judicial proceeding for Atlanta, Georgia individuals facing financial distress. For some bankruptcy filers, however, the first case filing may not have resulted in a successful discharge of debts, but resulted instead in an unsuccessful dismissal of the case. Other bankruptcy filers might have incurred additional debt after the successful discharge of debt in a prior case, and thus require another “fresh start.” Regardless of the motive, the Bankruptcy Code constrains multiple bankruptcy case filings by limiting how frequently a debtor may receive a bankruptcy discharge, by imposing rules limiting the applicability of the automatic stay in repeat cases, and by imposing limits on frequent filers.

Discharge Limitations

An individual may not receive a discharge in a Chapter 7 case if he or she received a discharge in another Chapter 7 case filed within eight years prior to the date the second case was filed, or, in most cases, if he or she received a discharge in a Chapter 13 case filed within six years prior to the date the Chapter 7 case was filed. An individual may not receive a discharge in a Chapter 13 case if he or she received a discharge in a Chapter 7 case filed within four years prior to the date the Chapter 13 case was filed, or if he or she received a discharge in a prior Chapter 13 case filed within two years prior to the date the second Chapter 13 case was filed.

Automatic Stay Limitations

The Bankruptcy Code also places limits on the applicability of the automatic stay, which protects debtors from collection efforts by their creditors, in situations where multiple bankruptcy cases are filed within a short period of time. If an individual has filed a case under any chapter of the Bankruptcy Code within one year of filing a second case, and the prior case was dismissed, then the automatic stay is only in effect for the first thirty days after the second case was filed. If an individual has filed two or more prior cases which were dismissed within a year of filing a new case, then there is no automatic stay at all. Normally, the automatic stay takes effect upon the filing of a bankruptcy case and remains in effect either until a creditor requests that it be lifted, or until the case is closed.

Eligibility Limitations

In certain extreme, rare situations, the Bankruptcy Code bars individuals from filing multiple bankruptcy cases within a short period of time by making them ineligible, by definition, to be a debtor in a case. An individual may not file a case if, within the prior one hundred and eighty days, they were a debtor in a bankruptcy case that was dismissed because of the individual’s “willful failure” to comply with bankruptcy court orders and directions, or if the individual had the earlier case dismissed while a creditor’s request to lift the automatic stay was pending. This limitation is designed to prevent abuse of the bankruptcy system by individuals who repeatedly file bankruptcy cases for the sole purpose of preventing a creditor from foreclosing on or repossessing property.

Since 1986, The Rothbloom Law Firm has served residents of Cobb, Fulton, Gwinnett, Paulding, Cherokee, DeKalb and all metro-Atlanta counties seeking relief from their business and personal debt. Our attorneys, Howard Rothbloom and Adam Herring, provide thoughtful counseling, careful planning and creative lawyering in bankruptcy cases filed under chapter 7 and chapter 13. Contact us today to discuss whether bankruptcy may be an option to relieve you of the burdens of business and consumer debt.