What is “post-petition” debt?

Post-petition debt is all debt incurred after the bankruptcy case is filed. These debts will not be a part of the bankruptcy case and cannot be discharged. The debtor is still liable on post-petition debts.

The effective date for determining whether a debt is post-petition is the bankruptcy filing date. If a new debt is incurred after the Chapter 7 bankruptcy case was filed (even if it’s before the discharge date), it is a post-petition debt and the debtor will remain obligated to pay this new debt. Only debts incurred prior to the filing date can be eliminated in your bankruptcy.

If the debtor simply has ongoing monthly payments on a debt that was originally incurred prior to the bankruptcy, the entire obligation is considered a pre-petition debt and will be discharged.

Shortened Automatic Stay for Repeat Bankruptcy Filings

If a debtor files bankruptcy, the automatic stay lasts as long as the bankruptcy case lasts. However, if the debtor's bankruptcy case is dismissed and the debtor files a second time within one year of the dismissal of the first case, the debtor's automatic stay lasts only 30 days. This is because there is a presumption that the debtor filed the second case in bad faith.

The debtor can file a motion to continue the automatic stay beyond the 30 days. In order for the court to grant this motion, the debtor must show, by clear and convincing evidence, that the second bankruptcy was filed in good faith.

If the second bankruptcy case is also dismissed and the debtor files a third bankruptcy within one year, there is no automatic stay upon the third filing. Again, the debtor would need to file a motion and prove the filing was in good faith in order to have an automatic stay for the third case.

What is an Automatic Stay?

When a debtor files for bankruptcy, a court order called the "automatic stay" acts as an automatic injunction that halts collection actions taken by a creditor to collect debts from the debtor. Once the automatic stay begins, creditors can not:

● seize or file a lien against the debtor's property

● file a civil lawsuit against the debtor

● cut off the debtor's utility service

● evict the debtor

● foreclose on the debtor's mortgage

There are some instances where the automatic stay does NOT stop collection activity:

● criminal proceedings (e.g. you will still be required to pay fines that were assessed as a punishment or writing a bad check)

● collection of alimony and child support

● The IRS can still conduct an audit, demand tax returns, and issue tax assessments and tax deficiency notices. But the automatic stay does temporarily stop the IRS from issuing liens or seizing the debtor's property or income.

The automatic stay begins at the moment the petition for bankruptcy is filed, and it applies to creditors whether they know about the bankruptcy or not. Willful violations of the automatic stay can result in damages, attorney fees, and even punitive damages.