Serial Bankruptcy Filers

By: Justin M. Kincheloe, Esq.

John Homeowner is in jeopardy of losing his home to foreclosure and decides to file bankruptcy.  John doesn’t really have any other debts; he just needs to delay the foreclosure.  He doesn’t show up to his 341(a) hearing and his case is dismissed by the court about two and a half months after filing.  John is happy that he was able to buy himself some time, but is still not ready to leave the home.  The bank learns that the case has been dismissed and sets a new sale date.  John wants to delay the foreclosure again, so he files a second bankruptcy.

What John does not know is that the automatic stay (the court order that prevents creditors from making attempts to collect on a debt) in his refiled bankruptcy case will only last 30 days.  After that, the bank will be free to continue with foreclosure despite the pending bankruptcy.  This is because 11 U.S.C. § 362(c)(3)(A) only provides for a 30-day automatic stay when a bankruptcy is refiled within one year of the prior case.  If more than one bankruptcy has been filed within the last year, then the automatic stay does not go into effect at all.  If John wants to have the automatic stay extended past the 30 days, then he will need to immediately file a motion with the court and convince the judge that this second bankruptcy case has been filed in good faith (not an easy task considering John’s history).  John fails to file a motion in time and the 30-day automatic stay expires.  The bank then proceeds with foreclosure and sells the home.  It is now too late for John and he must vacate the home or face eviction.

John now has two bankruptcies on his credit record and has lost his home to foreclosure.  With sufficient income, John could have possibly saved his home by filing a Chapter 13 and repaying the arrears on his mortgage over time.  John should have consulted with a knowledgeable attorney to understand his options and the consequences.  Had he done that, he may have been able to take a more favorable course of action.

The attorneys at Thompson Steinberg can help if you are dealing with foreclosure issues.  Please call Justin M. Kincheloe, Esq. at 951-359-1209 to schedule a free consultation.

Justin M. Kincheloe, Esq.

P: 951-359-1209 x202



Justin Kincheloe is a partner and co-founder at Thompson Steinberg.  He is licensed to practice in California and has been practicing consumer bankruptcy law for over three years.  Mr. Kincheloe was born and raised in Des Moines, Iowa before moving to California.  He strongly objects to the smell of musky colognes.

**The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This blog posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.**


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