Losing the Automatic Stay for Repeat Bankruptcy Filings

losing the automatic stay for repeat bankruptcy filings oklahoma

Automatic Stays Can Be Helpful in Oklahoma Bankruptcies

Filing for bankruptcy in Oklahoma City? You’re not alone. Every year, many residents grapple with financial hardships, seeking relief. However, a familiar yet little-known snag surfaces – losing the automatic stay for repeat bankruptcy filings in Oklahoma. 

Scott Harris Law, PLLC, has walked countless individuals through these complexities, equipped with deep insights into Oklahoma’s bankruptcy law. Their adept understanding has guided many to make informed choices tailored to their unique situations. 

If you’re treading these financial waters, contact Scott Harris Law, PLLC, for a free consultation and ensure you’re armed with the best guidance.

What is an Automatic Stay?

When someone files for bankruptcy, a legal protection called an automatic stay immediately comes into play. The automatic stay is a court order that stops most creditors from pursuing collection activities against the debtor. This means that for a time, actions like foreclosures, wage garnishments, and even those pesky collection calls come to a pause, offering the filer some breathing space. 

How Does the Automatic Stay Work?

The automatic stay is one of the immediate benefits that kicks in the moment a person files for bankruptcy, whether it’s under Chapter 7 or Chapter 13. Its primary role is to offer a temporary respite from creditors. Here’s how it works:

  • Immediate Effect: As soon as a bankruptcy petition is filed with the court, the automatic stay springs into action. This isn’t a benefit that takes days or weeks to materialize – it’s instantaneous. Creditors, upon receiving notification of the bankruptcy filing, are legally obligated to cease all collection efforts. This ensures that the debtor is given an immediate reprieve, allowing them to focus on their next steps without the constant stress of collection actions hanging over their heads.
  • Coverage: The protective umbrella of the automatic stay is expansive. It isn’t just about stopping those unnerving phone calls or letters from creditors. It puts a hold on foreclosure actions, meaning homeowners get a chance to figure out a plan. It stops wage garnishments, ensuring that workers take home their full pay. It also halts pending lawsuits related to debts, providing a legal sanctuary for the debtor. In short, the automatic stay offers a comprehensive shield against a host of collection activities.
  • Exceptions: While the automatic stay is powerful, it isn’t all-encompassing. Some actions sidestep its protective embrace. Notably, proceedings involving child support or alimony persist even in the face of a bankruptcy filing. This means that individuals are still responsible for these essential obligations. Additionally, specific tax proceedings, particularly those initiated by government entities, might proceed even with an active automatic stay. It’s crucial for debtors to be aware of these exceptions to adequately plan their financial journey.
  • Temporary Protection: The automatic stay, while a potent tool, doesn’t offer eternal protection. Its duration is influenced by several factors, including the bankruptcy chapter under which one files and any previous bankruptcy filings. For those who’ve filed for bankruptcy multiple times, the stay may be shortened or even non-existent. Furthermore, if a creditor believes they have a valid reason, they might approach the court, requesting the lifting of the automatic stay. In such scenarios, the debtor might need to defend the continuation of the stay in court.

What is the Effect of Repeat Bankruptcy Filing on the Automatic Stay?

Filing for bankruptcy more than once within a specified period can affect the protections the automatic stay offers. For those considering a repeat filing, understanding these effects is necessary. Here’s a closer look:

  1. Shortened Duration: For those who have had a bankruptcy case dismissed and subsequently filed another lawsuit within one year, the automatic stay’s duration in the new issue is limited. Instead of the protection lasting throughout the bankruptcy process, the automatic stay will only remain effective for 30 days. 
  2. No Automatic Stay: If you’ve had two or more bankruptcy cases dismissed within the past year and then decide to file again, the situation becomes even more challenging. In this scenario, the automatic stay does not come into effect at all. 
  3. Petitioning the Court: In cases of repeat filings, debtors can petition the bankruptcy court to impose or extend the automatic stay. However, they must demonstrate “good cause.” They need to convince the court that their current filing isn’t a tactic to game the system and that there are genuine reasons for seeking bankruptcy protection again.
  4. Reasoning Behind the Rules: By imposing restrictions on the automatic stay for repeat filers, the law tries to strike a balance. It wishes to ensure that those who genuinely need bankruptcy protection can access it while at the same time discouraging individuals from filing serially without a valid reason.

While the bankruptcy system is designed to relieve those in financial distress, it also has measures to ensure its fair use. For repeat filers, understanding the implications of the automatic stay is critical. Contact our bankruptcy attorney today for legal guidance.

What Happens After an Automatic Stay is Lifted?

Lifting an automatic stay is an important moment in the bankruptcy process. Let’s delve into the aftermath of such an event:

  • Resumption of Collection Activities: The most immediate effect of lifting the automatic stay is that creditors can restart their collection efforts. This could mean phone calls, letters, or legal notices. The protective barrier that once shielded the debtor from these activities is gone, making it crucial for the debtor to be prepared for increased communication from creditors.
  • Foreclosure Proceedings: If a homeowner was behind on their mortgage payments and the automatic stay prevented foreclosure, lifting the visit allows the lender to continue foreclosure proceedings. This could lead to the debtor losing their home if they don’t take immediate action.
  • Wage Garnishment: For debtors who had their wages garnished before filing for bankruptcy, lifting the automatic stay might mean the garnishment resumes. Creditors can again approach the debtor’s employer to withhold a portion of their paycheck to satisfy the debt.
  • Lawsuits and Legal Actions: Any lawsuits or legal actions related to debts paused due to the automatic stay can continue. This includes collections lawsuits and other legal proceedings, such as evictions for renters behind their rent.
  • Asset Seizure: In some cases, creditors might have the right to seize assets to satisfy a debt. Once the automatic stay is lifted, they can move forward with these actions, which might include repossessing a car or other valuable assets.
  • New Strategy Needed: For the debtor, the lifting of the automatic stay often necessitates a change in Strategy. They might need to negotiate directly with creditors, consider alternate repayment plans, or even rethink their bankruptcy approach.
  • Possible Refiling: In some situations, mainly where the lifting of the stay was due to a procedural error or oversight, the debtor might consider refiling their bankruptcy case. This could reinstate the automatic stay, but it’s essential to be aware of any limitations or restrictions on refiling.

Having a
bankruptcy attorney by your side is essential during these trying times. If you’re facing the consequences of a lifted automatic stay or need advice on your next steps, contact Scott Harris Law, PLLC. They can guide you through these challenges with their deep understanding of Oklahoma’s bankruptcy landscape, ensuring you make informed decisions.

Need Help Navigating Bankruptcy in Oklahoma City?

Dealing with financial difficulties can be overwhelming, especially when facing the realities of losing the automatic stay for repeat bankruptcy filings in Oklahoma. You don’t have to go through this alone.

At Scott Harris Law, PLLC, we’ve guided countless Oklahoma City residents through the complicated bankruptcy process, ensuring they receive the support, understanding, and legal skills they deserve. If you’re in a situation where you’re concerned about the automatic stay or any other aspect of the bankruptcy process, we’re here to help.

Reach out to us at Scott Harris Law, PLLC, today and take the first step toward regaining control of your financial future.

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