Automatic stay may not be automatic

An image of a Justice statue with law books in the background

This article is provided for informational purposes only and should not be considered legal advice. In this guide, we will address the most common questions and concerns related to alimony in Florida, helping you navigate the complex terrain of this important aspect of divorce law.

What does the term “automatic stay” mean? It means that upon the filing of a bankruptcy case, any other pending litigation is automatically stayed or stopped. If your house is about to be sold in a foreclosure action, the sale will be cancelled. If you have a family law case, the trial will be cancelled. No matter what is happening (with the exception of a criminal matter) the litigation will temporarily stop. This is one of the best benefits of a bankruptcy filing… if your income is being garnished it will stop, law suits will stop. If the bankruptcy is dismissed (this is an unsuccessful bankruptcy, a discharge is a successful bankruptcy), the stay will be lifted and all litigation can resume.

If you file a second bankruptcy within one year of the first bankruptcy being dismissed (after a chapter 7 discharge, you cannot file another chapter for 8 years) there is a presumption that this bankruptcy is filed in bad faith and your automatic stay will only last for thirty (30) days (11 U.S.C. § 362(c)(3)). In order to extend the stay past the thirty (30) days, you will have to prove to the court that you did file the second bankruptcy in good faith. You must present clear and convincing evidence that you are not filing in bad faith in order to extend the stay. This does not mean that you cannot file bankruptcy, but it does mean that you may not have a stay regarding the creditors.

If your second bankruptcy is dismissed and then you file a third bankruptcy there is no automatic stay at all. You will have to file a motion to request that a stay be imposed, and again, you must prove to the court with clear and convincing evidence that your 3rd bankruptcy is filed in good faith.

For more information on filing a bankruptcy and if you are entitled to the automatic stay, you can contact the attorneys at Schwam-Wilcox & Associates.

Blog Categories