Most people who are about to file Las Vegas bankruptcy, or who already filed did not and do not ever want to deal with the bankruptcy system again. Being heavily in debt is not a fun situation; staying out of it is preferable. However, some people are a bit looser with the bankruptcy system and file multiple times. The term for this is “serial bankruptcy,” which isn’t specifically defined but is addressed by the bankruptcy code. Here is what you need to know about serial bankruptcy and why people do it.
1. The term “serial bankruptcy” is an informal one. It doesn’t appear in the bankruptcy code. It’s a term that lawyers and judges made up to describe a spectrum of situations in which people file bankruptcy more than once in a short period of time, some of them more scrupulous than others.
2. At best the term refers to people who file bankruptcy not to discharge debt, prevent an eviction, or halt a foreclosure, but to delay and frustrate creditors from collecting on legitimate debts. Given that the bankruptcy code is meant to protect debtors from creditors, and given that creditors are usually large banks that don’t have to worry about keeping the lights on, this is pretty hard standard for a creditor or trustee to establish.
3. As such, there is no specific punishment for filing bankruptcy a certain number of times.
4. The bankruptcy code does, however, limit what debtors can accomplish with the code in given circumstances. The biggest one is that although debtors can file Chapter 7 as often as they’d like, they can only obtain a discharge eight years after their last filing in which they receive one.
5. For Chapter 13, a discharge can only occur six years after the previous filing that ended in a discharge.
6.The bankruptcy code also does not freely give out automatic stays. In other words, if a debtor’s case was dismissed in the previous year and the debtor refiles, the automatic stay lasts only 30 days. If a debtor has two or more cases pending in the previous year, he or she will have no automatic stay to prevent collection and foreclosure
7. Creditors do have some tools of their own. As always, they can try to file a motion for relief from the automatic stay, which is not easy to accomplish. If the bankruptcy court grants them an in rem stay relief, they have unfettered power to initiate foreclosure proceedings against a debtor. Bankruptcy courts rarely grant such reliefs unless the debtor behaves egregiously.
Serial bankruptcy does occur, but it’s rarely committed by people who file to thwart their creditors. Because the code allows them so much leeway, it’s pretty difficult to accomplish such a feat. Although, debtors can have legitimate reasons for filing bankruptcy more than once in a short period, for instance to use Chapter 13 to strip a second mortgagee’s lien off their houses after discharging it in Chapter 7.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Freedom Law Firm Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-830-7784 to set up your free consultation.