My previous post dealt with the first of two possible settings involving a previous bankruptcy.  The first setting was when you received a discharge in the previous bankruptcy.  Today’s post deals with the second situation, i.e., your previous bankruptcy was dismissed.

II.        Your Previous Case Was Dismissed

Other than the 180-day bar of § 109(g), or some other time bar imposed on you by the Court because of naughty behavior, there is no time bar to filing another case after a dismissal.

However, there is a serious loss of protection with serial filing.  Most particularly, you lose the protection of the automatic stay, which is perhaps the most important benefit of filing — other than the discharge.  A little history will help to set the stage.

Prior to October 17, 2005 —the date the current incarnation of the Bankruptcy Code went into effect — some married debtors used the following tactic to indefinitely postpone a foreclosure sale:  The day before the foreclosure sale was scheduled to take place the husband filed a face sheet Chapter 13 (i.e., just the Voluntary Petition, without any of the schedules or other required documents), which triggered the automatic stay, thus stopping the sale.  The debtor husband took no further action in the case, so forty-five days later the case was automatically dismissed (under current law this would be done pursuant to 11 U.S.C. § 521(i)(1)).  Once the husband’s case was dismissed and the foreclosure was restarted, the wife would file a face sheet case, thus triggering the automatic stay. When her case was dismissed the husband would re-file, and so on.  This sort of tag-teaming led to the current § 362(c).

Rather than typing out § 362(c)’s somewhat confusing and lengthy text here, let me summarize its gist:  If a debtor has had one case pending during the twelve months prior to the current case, the automatic stay automatically terminates thirty days after filing unless the Court – after notice and a hearing – extends the stay.  If the debtor has had two or more cases pending during the twelve months prior to the current case, then there is no automatic stay.

Thus, it is unwise to file a bankruptcy without sincerely intending to proceed to completion because a dismissal could compromise one of the most important protections you get from filing a bankruptcy case.

Of course, as with any bankruptcy question, you should always consult a highly skilled bankruptcy attorney before making any decisions about filing.