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So, you’ve already filed for bankruptcy. With the automatic stay in effect, creditors, especially the abusive ones, wouldn’t be able to bug you. However, it’s inevitable to face renewed financial difficulties soon after emerging from bankruptcy.
If you’re thinking of filing for a second time, you may want to learn about the governing rules on repeat filings. It’s because you can lose the automatic stay for multiple bankruptcy filings.
To avoid forfeiting your rights to bankruptcy benefits, read this blog post. Let our bankruptcy attorney from Northwest Debt Relief Law Firm discuss everything you need to know about the automatic stay provision and the effects of losing this privilege due to serial filing. But before diving into these discussions, here’s a quick refresher course on automatic stay.
What is an automatic stay?
An automatic stay is a provision in the US Bankruptcy Code that temporarily prevents creditors, collection agencies, government entities, and others from contacting or requesting money from their debtors.
Immediately after a debtor files for bankruptcy, the automatic stay takes effect. Its enforcement will protect debtors against creditors who want to start or continue pursuing a debtor or the debtor’s property.
However, this petition does not apply to non-debtor entities, such as corporate affiliates, corporate officers, co-defendants, or guarantors.
What activities are subject to the automatic stay?
As mentioned, the automatic stay protects debtors from the creditors’ collection activities. When the creditor receives a notice from the court regarding the debtor’s bankruptcy, the following activities are subject to this federal court order:
- Foreclosure proceedings
- Tenant eviction
- Utility disconnections
- Collection of overpaid public benefits
- Multiple wage garnishment
Unless the creditor properly files and serves a motion for relief from the automatic stay, the injunction will not be removed or modified. Of course, it depends on the bankruptcy judge granting the motion.
What activities are not subject to the automatic stay?
There are, however, debtor proceedings and obligations that are not subject to an automatic stay. Child support and alimony payments are sample obligations not protected by the automatic stay provision. Others include:
- Money owed because of a criminal proceeding
- Interception of a tax refund for domestic support obligations.
- Action by a landlord of a nonresidential lease that expired before the filing of a petition
- Tax obligations, including audits, demand for tax returns, and tax assessment
- Domestic proceedings, such as dissolution of marriage and domestic violence
What is the consequence of violating the automatic stay?
Once the automatic stay is in effect, the creditor must honor the provision and refrain from contacting the debtor. Should the creditor violate this federal injunction, the debtor can file a lawsuit against the creditor’s company. Violators could face serious repercussions that may result in court fines.
It’s important to remember that these consequences only apply when there’s a willful violation. Sometimes, miscommunication occurs between the creditor and the bankruptcy court, resulting in an unintentional violation.
In other words, the debtor typically may only recover damages if the creditor has a deliberate intent to violate the automatic stay. For instance, the creditor inadvertently moved to foreclose the debtor’s estate. If the violation is proven, the creditor must return the property immediately to the debtor.
How long will an automatic stay in effect?
An automatic stay remains as long as the bankruptcy proceeding continues and the court issues a bankruptcy discharge to the debtor. However, there are instances where an automatic stay can be cancelled or lifted:
- When the property serving as collateral has no equity
- If the litigation doesn’t affect the bankruptcy case
- The debtor has more than one bankruptcy case pending at the same time (repeat bankruptcy filing)
These conditions only mean that the automatic stay isn’t absolute.
Creditors—for their benefit—could file a motion to lift the stay before the bankruptcy case is closed, as long as they get the judge’s permission first. An automatic stay will not also apply in cases where litigation can’t move forward. These situations include criminal matters, domestic proceedings, and support obligations.
Lastly, multiple bankruptcy filings can affect your automatic stay timeline or cancel it altogether. It’s because the bankruptcy law determines the time limits on the type or chapter you choose during your filing. And these limits apply only to bankruptcies where you have received a debt discharge.
Losing an automatic stay for repeat bankruptcy filings
Bankruptcy is in place to provide debtors financial safety net. And an automatic stay is imposed to give further relief to such a crisis. However, some rules are just meant to be violated, whether intentionally or accidentally. And a court order such as an automatic stay is no exemption.
The accounts of serial filing in the past led to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”)
One of the amendments was to limit or eliminate the automatic stay protections for repeat filings within one year.
Yes, you can lose your rights to an automatic stay if the court finds out that you’ve acted in bad faith while filing a second case.
If you’re wondering when to file for bankruptcy protection again, you have to recognize first what type of bankruptcy you filed before and what kind of bankruptcy you want to file now. In this regard, let’s talk about the two most common types of bankruptcy.
Chapter 7 bankruptcy
Chapter 7 or liquidation bankruptcy, is a typical legal process to clear your debt. It works by protecting the property you need to live a dignified life. But if you have numerous properties, the bankruptcy trustee may liquidate (sell) them and use the sales proceeds to pay creditors.
While bankruptcy falls under federal law, every state has its way of deciding the type and amount of property you can exempt. Some states are more generous than others; thus, exemptions may vary.
If you previously filed Chapter 7 bankruptcy, you’ll need to wait eight years after your first filing to be eligible for another discharge under Chapter 7.
So, filing another bankruptcy within a year of your first case’s dismissal will result in the denial of discharge in the second case. Also, the automatic stay will terminate within 30 days of the new case filing. The court might also find your filing abusive, which might prevent you from using Chapter 7 and exercising your automatic stay rights.
Chapter 13 bankruptcy
Unlike a Chapter 7 case, Chapter 13 bankruptcy allows debtors to restructure bills over three to five years; in some cases, they may pay less than what they owed.
A typical Chapter 13 filer has a regular income and can repay creditors some amount that may not be the total unpaid balance. Other debtors only need some time to catch up on bills without facing collection lawsuits or wage garnishments.
Just like in Chapter 7, the automatic stay takes effect right away once you file for Chapter 13 bankruptcy. Remember, though, that you’re only allowed to file for a second Chapter 13 bankruptcy two years after the first filing. Violating this rule will also lead to terminating your automatic stay.
Seek expert advice from bankruptcy lawyers in Portland
The quickest way to relieve yourself from debt is to file for bankruptcy. Whether you file a Chapter 7 or 13 case, the weight of living in debt is somehow made bearable because of an automatic stay.
However, we talked about how the same financial issues could arise soon after a previous debt has been resolved. As a result, you might file for a second case the same year without knowing the time limits or waiting periods on bankruptcy discharges. If you’re found acting in bad faith, you might lose your automatic stay.
The question now is, how can you avoid committing such a mistake?
First, you need a bankruptcy attorney in Portland to help you understand the best debt relief option that fits you. Hiring a bankruptcy lawyer will make your filing easier.
Second, seek expert advice when switching one chapter case to another. Ask your lawyer when filing for multiple bankruptcy cases is a smart decision.
Reach out to Northwest Debt Relief Law Firm to get the assistance you need. We believe that bankruptcy is not necessarily the end of financial freedom—it can be the beginning. So, talk to our most trusted debt relief lawyers to receive the best legal services. This decision could be your first step to living a debt-free life.
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The post Can You Lose an Automatic Stay for Repeat Bankruptcy Filings? appeared first on Portland Bankruptcy Attorney | Northwest Debt Relief Law Firm.
Readers of our posts are aware that at Shenwick & Associates we do personal and business bankruptcy filings and workouts for many clients. In addition, we review settlement agreements for clients so that the settlement payments are not captured by section 547 of the Bankruptcy Code as a preference (also known as "preference proofing a settlement agreement"). This week we were retained by 2 clients who wanted their settlement agreements reviewed regarding preference exposure.This work is usually referred to us by the client or the client's litigator. There are generally 3 signs that indicate that a defendant may file for bankruptcy protection either after the settlement agreement is signed or after making some or all of the payments required by the settlement agreement.
- During settlement negotiations, the defendant discusses filing for bankruptcy.
- During settlement negotiations, the defendant discusses closing its business or
- The defendant asks for more than 30 days to make the initial settlement payment.
In the event that a defendant files for chapter 7 bankruptcy within 90 days of making a payment to the plaintiff, that payment may be a voidable preference and subject to recapture or clawback by a bankruptcy trustee in a chapter 7 bankruptcy proceeding.Clients will be extremely upset and point fingers if their settlement payments are clawed back by a bankruptcy trustee or they need to defend a lawsuit (adversary proceeding) by a bankruptcy trustee seeking to recapture those payments.What can be done to preference proof a settlement payment? Below are some suggestions and strategies, but a risk will always remain until 90 days have passed from the date of payment.
- Seek financial statements from the defendant or better yet a financial statement under penalty of perjury (an Affidavit of Net Worth), Have your CPA or a bankruptcy attorney review those financial statements.
- Seek a guarantee of the payments from a 3rd party.
- Make the plaintiff a secured creditor by receiving a mortgage on real estate or a security agreement and ucc-3 on another asset like accounts receivable.
- Structure the settlement agreement so payments are made sooner rather than later.
- Have the defendant stipulate to a judgment or a confession of judgment and have the plaintiff provide a satisfaction, 90 days after payment is made.
- Delay providing a release to the defendant until 90 days have passed from payment.
- Use the “earmarking doctrine” which provides that payments that are supplied by a 3rd party such as a bank or a malpractice insurer and earmarked for payment to a creditor are not preferential.
- Language should be included in the settlement agreement that preserves the plaintiff’s claim if any settlement payments are recaptured.
- Finally the settlement agreement should state that if the defendant files for bankruptcy the automatic stay, provided for in section 362 of the bankruptcy code is deemed lifted with respect to the Plaintiff.
Although no single factor may win the day, a plaintiff should attempt to obtain as many of the above points as possible.Plaintiffs or their counsel having questions about settlement agreements and preferences should contact Jim Shenwick, Esq. 212-541-6224 or [email protected]
CFPB Estimates $88 Billion in Medical Bills on Credit ReportsPrepared Remarks of Director Rohit Chopra on New CFPB Medical Debt Report
By Rohit Chopra – MAR 01, 2022 (reprint)
“Good morning. Today, the CFPB released a report on medical billing and collection practices in our country. Medical bills are the most common debt in collections reported on our credit reports. Our own review suggests that roughly 43 million people had medical bills on their credit report, in June 2021, with the total outstanding amount around $88 billion.
In theory, credit reports are supposed to be an accurate repository of data about whether you have met your obligations on loans you have taken out. This theory is far from reality. To make things worse, credit reports include items like unpaid medical bills, where patients frequently do not know what services will be performed and what they will be charged.
For many patients, it can feel like full-time detective work to understand procedure codes, whether something was in-network vs. out-of-network, or inpatient vs. outpatient. Many procedures include separate bills from providers and facilities. Payment assistance programs, required by law as a condition of the nonprofit status of many hospitals, are sometimes not well advertised, and they can be hard to access. Complex and confounding medical billing practices make it impossible for patients and their families, already struggling with the stress and anxiety of the need for medical care, to ascertain the accuracy of the bills.
In the United States, it is all too common for patients and their families to be caught in a doom loop between their provider and their insurance company. Even when a patient tries to battle to get an accurate bill or an insurance claim paid, medical debt collectors have a weapon that is hard to fight against: the credit report. I am concerned that the credit reporting system is being weaponized as a tool of coercion to get people to pay medical bills they may not even owe.
Coercive credit reporting forces patients and their families to pay bills whose accuracy they doubt. And, for those families who refuse to pay a bill whose accuracy they question, they can find their credit ruined and their prospects for employment and housing dimmed.
In many ways, it’s hard to call medical debt a real debt. Few people choose to take on medical debt, and typically, patients have no idea how much they will be charged for a service or a procedure. There’s no upfront disclosure or interest rate to compare. Individuals and families must confront a billing and collections system that can be best described as error-plagued, confusing, and labyrinthine.
The scope of these problems is extraordinary: our report published today estimates that 58% of the debt that is in collections and on people’s credit records stems from medical bills.
Having a medical debt collection mark on a credit record can make it harder to get credit, rent or buy a home, or find a job. Families are pushed into bankruptcy by medical debts that they cannot pay.
Coercive credit reporting to obtain payments on medical debt can also deter families from seeking needed medical care. Coercive credit reporting interferes with the relationship between patients and their doctors and can lead to worse medical outcomes.
The CFPB will be taking several steps in light of the report:
First, we will be closely scrutinizing the Big Three credit reporting agencies to ensure that they are not being used as a tool to coerce and extort patients on medical bills they may not even owe. The law requires Equifax, Experian, and TransUnion to follow reasonable procedures to assure maximum possible accuracy of the information they collect and disseminate about each of us. They are responsible for guarding against contamination of the credit reporting system with unsubstantiated and inaccurate reports of debt allegedly owed. We expect them to take seriously their role as major actors in the credit reporting system—a system whose integrity and accuracy can determine the financial futures of hundreds of millions of people. If furnishers, whether of medical debt or otherwise, are polluting the system with inaccurate information, we will expect the Big Three to cut off their access to the credit reporting system.
Second, the CFPB will work with other government agencies to determine whether it is appropriate to include medical debt in their own underwriting and role in credit reporting. I am grateful to our Secretary of Veterans Affairs Denis McDonough for working with the CFPB on a new rule that will dramatically reduce the number of medical debts subject to credit reporting for veterans. The VA’s rule requires all other methods of debt collection to be exhausted before the bill is reported to the credit reporting agencies, thus ensuring that the credit reporting system is not used as a tool of coercion. This sets an important standard for other medical providers to meet. We intend to continue our work to ensure that government policies aren’t the source of these harms to families and patients. We are interested in what more government can do to make sure patients can exercise their rights to access financial assistance programs and payment plans, as well as obtain validation of debts allegedly owed.
Finally, we will be assessing whether it is appropriate for unpaid medical billing data to be included on credit reports altogether. We already know how a medical bill reported on credit reports is less predictive of future repayment than reporting on traditional credit obligations. We will make this determination while also taking steps to reduce harmful and inaccurate credit reporting.
For example, we will partner with the Department of Health and Human Services to ensure patients are not charged and do not pay illegal surcharges for medical care, as we did with our recent action on the No Surprises Act in January. We will also investigate how best to facilitate patients’ access to financial assistance programs offered by medical providers. Our long-term determination on whether it is appropriate for credit reporting agencies to include so-called medical debt on consumer credit reports will also be informed by additional research on medical billing, collections, and reporting.
On a broader scale, the contamination of the system by coercive credit reporting makes it harder for lenders to fairly and responsibly price credit, based on actual default risk.
Earlier this year, we issued a bulletin on medical debt and explained that debt collectors should only collect and report debt that is in fact legally due and owed. This is a basic precept of the law, and we will continue to ensure that families are not harmed for bills not due.
I also look forward to discussions with the business community, including hospitals, labs, outpatient facilities, payors, and practitioners to identify ways we can reduce the stress of medical debt and coercive credit reporting. Many in the health care community have already taken steps to avoid this behavior and to work constructively with patients before launching an assault on their credit report.
The pandemic has exposed how quickly our country and our lives can change. As we look to recover, it will be critical that we ensure that patients seeking care do not find their financial lives ruined. I expect that we will report further on any additional efforts to combat coercive credit reporting this summer.
Thank you.”
The post $88 Billion in Medical Bills on Credit Reports appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.
“We are grateful for all the kindness and respect they showed us in handling our case to completion. ” T.D. and R.I.
Diane and Jay are an absolutely phenomenal professional team. Bankruptcy is not an easy undertaking and there is a lot of paperwork you have to gather before filing so be prepared and do not get annoyed because Diane and Jay will guide you every step of the way. Try looking at it as a valuable learning experience to get you back on the right track to financial stability. They answered all our questions patiently and thoroughly explained the legal processes and what we could expect so there were no surprises. Her website is a fantastic reference for both clients and attorneys. Spend some time reviewing it and you’ll be convinced that she is the right attorney for you. From your first call to Diane you will immediately see that she is compassionate in understanding your situation and will feel confident that she is the right attorney to proceed with. Keep in mind that she has been specializing in bankruptcy’s for about 30 years and is held in high esteem within the court system. Her fees are very reasonable and her Yelp review page says “discounts available” which we found to be true as my spouse and myself are both veterans and we originally connected with Diane through a link upon another link within the VA Weekly Newsletter. We highly recommend Diane and Jay and are most grateful for all the kindness and respect they showed us in handling our case to completion. T.D. and R.I.
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The post We are grateful for all the kindness and respect they showed us. appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.
Bustle reports that actor Andrew Garfield claims bankruptcy was one of the best things that has ever happened to his family.
His roles in The Social Network and The Amazing Spiderman brought Garfield fame and success, but his family had not always been so financially fortunate. Garfield looks back on those finacial struggles and views them in a somewhat positive light because he and his family were fortunate enough to learn important life lessons came from those struggles.
When Garfield was about 12 years old, his father became bankrupt. Garfield claims it was the best thing to happen to their family because his father “…realized all the people he loved were still there… his wife, his kids, his friends, himself. He was brought to his knees and totally humbled, and then he started doing more of what he was called to do.”
His father then went on to do what he loved: he became a swimming coach at a local club in Surrey, England.
Seeing what his father went through taught Garfield a very valuable life lesson. “My main goal in this life is to cultivate and rub up against the people, the places, the projects, the practices — that’s alliteration there with the p’s — that make me feel most alive”. Seeing his father burdened financially and come out of it a happier person is what gave Garfield his drive to take up passion projects.
This passion he accumulated displays in his successful career. In his 15+ year long career, Garfield has obtained hundreds of nominations including two Academy Award Nominations and has won several awards including a Golden Globe award & Tony Award.
Garfield & his family are proof that some people just need a second chance.
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The post Andrew Garfield Claims Bankruptcy Was The “Best Thing” That Happened To His Family appeared first on Allmand Law Firm, PLLC.
CBS News (link below) has an article about impact of Omicron virus on restaurants. https://www.cbsnews.com/amp/news/restaurants-closing-2022-without-aid-re...At Shenwick & Associates we have been working with many restaurants whose business has been impacted by Omicron and the guarantors of those leases. Jim Shenwick 212 541 6224 [email protected]
Harold Israel, Esq. at Levenfeld Pearlstein, LLC is reporting that the Sub V Bankruptcy Debt limits, which had been temporarily increased to $7,500,000.00, are posed to be made permanent.
The article can be found at https://lnkd.in/dYQBsFEy
A detailed article about Subchapter V bankruptcy can be found at our blog at:
WHAT HAPPENS AT THE END OF A COVID-19 FORECLOSURE FORBEARANCE?Can servicers demand a large balance?
Generally, the servicers should not be demanding full payment following a COVID forbearance. There are a number of loss mitigation options for people coming out of a COVID forbearance. In order to know which may apply one needs to know who owns the loan (who is the investor). Is it a GSE, FHA or private label loan?
National Consumer Law Center “NCLC” has a summary chart of the options available for borrowers facing a COVID-19 related hardship. The options that they can access depend on the loan investor. In addition to the forbearance protections provided by the (CARES) Act, Fannie Mae, Freddie Mac, FHA, VA, and USDA borrowers all have access to expanded options provided by their investors. These programs are discussed in greater depth in Chapter 12 of Mortgage Servicing, which will be freely accessible during the COVID.
NCLC’s Summary of Foreclosure Alternatives
The post What Happens at the End of a COVID Mortgage Forbearance? appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy Attorney.
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