There are many reasons that a bankruptcy Court may dismiss a case. The
reasons for dismissal range from simple procedural mistakes and missed
deadlines to blatant fraud. In the Southern District of Florida, most
dismissals are with a 180-day prejudice period. This bars the debtor from
filing another bankruptcy for that period of time.
What does this mean for you as a Debtor filing in the Southern District
of Florida? The results can be harsh in that even the smallest of procedural
mistakes – including not filing the correct document – can
lead to a dismissal which prohibits you from filing another case immediately.
It can put you at risk of litigation and judgments which would have otherwise
been stayed by the filing of the bankruptcy. Because of this, it is important
to discuss your case with an experienced attorney to ensure your case
proceeds smoothly and it isn’t at risk of being dismissed.
Following the dismissal of a case with prejudice, the only way to file
a case during the prejudice period is to motion the court to reduce the
prejudice period. You will need to show the Court good cause for the dismissal
and why the Court should allow you to immediately file another case. A
Debtor may face opposition from Creditors if Creditors believe the Debtor
is seeking to shorten the prejudice period in bad faith. The bankruptcy
code does not define bad faith, however, bankruptcy courts around the
country have issued opinions defining this matter – a topic for
In most instances, if the Court allows a Debtor to shorten the prejudice
period and file a new bankruptcy, the automatic stay will be in effect
for only 30 days. The Debtor will be required to file a Motion asking
the Court to extend the automatic stay beyond the 30 days for the duration
of the bankruptcy. This motion must be filed and heard within 30 days
of filing the case. If a Debtor fails to file a Motion to Extend the Automatic
Stay, the stay will be lifted on the 31st day, and Creditors will be permitted to continue their collection efforts.
As outlined in section 362 of the bankruptcy code, the court may grant
a debtor a second bite at the proverbial apple. However, the case under
additional scrutiny to ensure it was not filed in bad faith and it is
in compliance with all requirements. More importantly, a Trustee may seek
dismissal of the case as a result of a Debtor’s failure to extend
the automatic stay.
A Debtor, or potential Debtor, should discuss the filing of multiple bankruptcies with an
experienced attorney to understand the complexities involved with multiple filings. As this
adds another layer of complexity.