Bankruptcy’s automatic stay prohibits most creditors from attempting to collect their debts from you while your case is pending. But if you had a recent bankruptcy that was dismissed, the automatic stay in your new case may be limited. Read on to learn more about how to file a motion to extend the automatic stay in your bankruptcy.
The automatic stay in bankruptcy is designed to protect you from collection actions while your case is being processed. In addition to protecting you from obvious collection activities such as lawsuits or foreclosure actions, the automatic stay also prohibits creditors from calling or contacting you about collecting their debt. If a creditor harasses you or continues its collection efforts against you in violation of the automatic stay, you will typically have grounds to seek damages against it.
In general, the automatic stay is effective until your case is closed. But it can be lifted by the court for cause at the request of a creditor. (To learn more, see When the Stay Can Be Removed.)
Also, under certain circumstances, the stay can automatically terminate prior to the completion of your case. If you already filed a bankruptcy case that got dismissed by the court, the automatic stay in a subsequent case filed within one year of the previous dismissal will only last 30 days. This means that unless you petition the court to extend the stay, creditors will be free to continue collection activities during your bankruptcy.
If you want to extend the automatic stay, you must file a motion with the court and explain the reasons your previous bankruptcy was dismissed and why the court should extend the stay in your current case. In general, for the court to approve your motion, you must show that you filed the subsequent bankruptcy in good faith (not simply to delay or defraud creditors).
The specific procedures for filing a motion to extend the automatic stay depend on the rules in your jurisdiction. But the following are typically the most common steps you must take:
Find and complete the appropriate forms. Each bankruptcy district has its own forms for specific motions and notices. Check with your local bankruptcy court to find all appropriate forms related to motions to extend the automatic stay. But be aware that your jurisdiction may not have a standard form to fill out. In that case, you will have to create your own motion and declarations.
Obtain a hearing date and file the motion. In most cases, you will need to obtain a hearing date from the court (the procedures will vary depending on where you live) prior to filing the motion. Keep in mind that the hearing must be completed before the stay expires. As a result, you typically must file your motion immediately after filing your case. As discussed, in your motion you must explain to the court why your first bankruptcy was dismissed and why this case is filed in good faith. After filing the motion with the court, you must serve it on the bankruptcy trustee and your creditors (most courts will have a standard notice form for motions to extend the stay).
Attend the hearing if necessary. If a creditor or other party in interest opposes your motion, be prepared to argue your case in front of the judge. However, if there is no opposition, the court may grant your motion through a tentative ruling and take the hearing off calendar. Make sure to review all documents received from the court and attend the hearing unless your appearance is specifically excused.