In my line of work, I frequently hear, ""My judgment debtor cannot declare bankruptcy"" or ""My judgment debtor cannot declare bankruptcy twice."" There are few obstacles preventing a debtor from registering for bankruptcy protection as frequently as desired. Those who file their requests more frequently than the law permits will ultimately have their requests denied (dismissed).
Certain debtors register for bankruptcy protection so frequently that they irritate the courts and have been dubbed ""serial bankruptcy filers"" The following is a summary of some of the recent modifications to the law that are intended to deter repeat bankruptcy filers:
If a debtor had previously filed for (dismissed) bankruptcy within the preceding 12 months, the protection from creditors will now only last 30 days. Even better, there will be no bankruptcy allowed (and the debtor will have no protection from creditors) if the debtor has had more than one previous bankruptcy dismissed within the preceding 12 months.
A loophole for serial bankruptcy registrants is that even if their Chapter 7 bankruptcy case was dismissed for abuse and they file again under a different chapter (such as Chapter 13), the standard protective stay against creditors remains in effect.
In addition, debtors cannot file for a new bankruptcy case for 180 days if their previous case was dismissed for willful failure to comply with a court order or for agreeing to a creditor's request for relief from their automatic bankruptcy stay.
If your debtor is a frequent bankruptcy filer, you could locate the case numbers of their most recent bankruptcy filings (in all districts) and search for dismissals or terminations; if you choose to appear in court, you should be prepared to present this information.
Insolvency is significant. Legally, the petitioner is presumed to be insolvent 90 days prior to the petition's filing date. If a creditor initiates a collection action even one day after a debtor's bankruptcy filing, the creditor has violated the automatic stay mandated by federal law.
You have violated the automatic stay if you attempt to collect from the debtor between the date they filed for bankruptcy protection and the date their case is dismissed or terminated. Immediately return the money to the debtor if this occurs by error.
If it was unintentional and you return the money to the debtor as soon as you discover of their bankruptcy, you should be fine. If you fail to return the debtor's money after learning of their recent bankruptcy, you may be found to have willfully violated federal law and will be required to pay significant sanctions, damages, and attorney fees (in addition to returning the debtor's money).
After receiving notice of a bankruptcy, it is irrelevant if you have not yet received the funds directly. For instance, if you ordered the sheriff to levy the debtor's bank account the day after they filed for bankruptcy, it is your responsibility to return the funds to the debtor. In the case of a levy, you would notify the bailiff of the bankruptcy and request that they return the funds to the debtor.
Due to bankruptcy difficulties, costs, and risks of violating federal law, the mere act of initiating the bankruptcy process causes the majority of creditors to abandon the debtor and never return.
When a debtor declares bankruptcy, the majority of creditors will move away, as the debtors are aware. A possible violation of a debtor's bankruptcy is something to be aware of, but a savvy creditor will continue to monitor the debtor's BK status. Unless the debtor is truly impoverished. Why bother attempting to collect in such a case?
Few creditors are astute enough to regularly check PACER to determine whether a debtor's bankruptcy is successful (their debts are discharged) or dismissed or terminated (their bankruptcy attempt failed).
To bring a repeat BK petitioner to the court's attention, one can use PACER to track the financial documents the debtor is required to submit within 15 days of submitting their petition.
One is permitted to attend the 341st meeting of creditors. During your five-minute appearance at the 341 meeting of creditors, you have the option to investigate potentially useful information and possible inconsistencies in the debtor's documentation.
The timeframe for a debtor to file for bankruptcy again ranges from 2 to 8 years.
A debtor is ineligible for a Chapter 7 discharge if they have received a Chapter 7 discharge within the past eight years, or within six years if they have previously filed a Chapter 13 case. The time periods in each case are based on the dates of filing, not the outcome of the previous bankruptcy attempt. (See 11 USC 348a and 11 USC 727a).
If the debtor has previously filed for Chapter 7 bankruptcy, they are required to wait four years before registering for Chapter 13 bankruptcy. (See Federal Law 1328f1).
If the debtor has previously filed for Chapter 13 bankruptcy, they must wait two years before filing for Chapter 13 bankruptcy again. (See Federal Law 1328f2).
Debtors are not permitted to have two outstanding or active bankruptcies at the same time.""
" - https://www.affordablecebu.com/