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The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed by President Bush on April 20, 2005. The Act has a general effective date of October 17, 2005. Among its many provisions, the Act affects the availability of the automatic stay for “serial” bankruptcy filers.
Some of the new sections that will be relevant to title clearance are:
Section 362(c)(3): This section allows for the termination of the automatic stay. If a bankruptcy case is filed under Chapter 7, 11, or 13, and a previous case of the debtor was pending within the preceding year and had been dismissed, the automatic stay in the subsequent bankruptcy shall terminate on the 30th day after the date of filing. The debtor can attempt to have the stay extended if he or she can show, at a hearing on notice, that the subsequent bankruptcy was filed in good faith regarding the creditor sought to be stayed.
If a debtor files a case, and two or more cases of the debtor were pending within the previous year but were dismissed, the automatic stay under Section 362 will not go into effect.
Section 362(j): If the automatic stay has been terminated under Section 362(c), the Bankruptcy Court, on the request of a party in interest, will issue an order confirming that the automatic stay in a case stay has been terminated.
Section 362(d) (4): Under this section, if the Bankruptcy Court Order granting relief from the automatic stay is recorded in compliance with applicable state law - in the Office of the Clerk of the County or the City Register where the property is located - the order shall be binding in any other case affecting the real property in question within the next two years.
This relief is available if the Court finds that the filing of the bankruptcy case was part of a scheme to delay, hinder and defraud a creditor, whose claim is secured by an interest in real property, which involved either:
(1) the transfer of all or part ownership of, or other interest in, such real property without the consent of the secured creditor or court approval; or
(2) multiple bankruptcy filings affecting such real property.
The Seaport Title Agency - 106 Woodcleft Avenue - 2nd Floor - Freeport, NY 11520
Phone: (516) 867-5100 - Fax: (516) 867-5700
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