Sacramento Bankruptcy: What are the Differences if you are Filing a Second or Third Bankruptcy?

An unsuccessful Chapter 7 or 13 bankruptcy filing within the last year creates a presumption that your second bankruptcy is in “bad faith.”  As a result, the court will limit the automatic stay to 30 days in a second or third bankruptcy filing, and the court will only extend that stay if you prove to the court that you are filing in “good faith.”

A determination of bad faith can be made if you had a previous bankruptcy which was dismissed due to failure to provide required documents without an excuse.  Likewise, the court will find bad faith if you file for bankruptcy but your financial situation has not changed enough to allow financial discharge or completion of a bankruptcy plan.  It is also important to note that if you were forced to file a Chapter 13 bankruptcy after failing the Chapter 7 means test, then the court will limit the automatic stay to 30 days.

A third (or more) bankruptcy case within a single year will mean no automatic stay at all.  To earn the benefit of the automatic stay, in these cases the court must receive proof that the new bankruptcy is in good faith and application must be made with the court to impose the stay on creditors.  Because of these requirements, waiting to the leave of a foreclosure sale in these circumstances would mean that it is too late.  Contact Sagaria Law’s Sacramento office to get started on the fresh start to which you are entitled by law.

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