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Understanding bankruptcy’s automatic stay

When individuals or businesses file bankruptcy, something invisible yet incredibly resilient occurs. It serves to deflect the attempts by creditors and bill collectors to collect money owed by a debtor for services rendered or goods received.

An important aspect of bankruptcy law is known as the ‘automatic stay.’ The ‘stay’ basically acts like Teflon against attempts to collect debts allegedly owed by a debtor. In the standard bankruptcy, the automatic stay remains in effect during the entire pendency of a bankruptcy. However, exceptions to that norm were enacted when Congress overhauled the U.S. Bankruptcy Code in 2005.

A major component of the Bankruptcy Abuse and Creditor Prevention Act of 2005, which served to overhaul the U.S. Bankruptcy Code, referred to automatic stays. As Congress contemplated how to tweak the laws about automatic stays, the general consensus was to write a law that would deter debtors from filing and dismissing a bankruptcy just to benefit from the protections afforded by the automatic stay.
So now, when a debtor files for bankruptcy, if it’s the first time that case was filed, the bankruptcy receives a complete automatic stay.

However, say a debtor (business or individual) filed for bankruptcy within the last year and the case was dismissed prior to discharge, whether that occurred because the debtor requested it or the court ordered it. If that case is refilled within a year, it will enjoy an automatic stay of 30 days.

If a debtor files and dismisses the same case several times, the case will not benefit from an automatic stay at all. Congress wanted to ensure that debtors are not abusing the privilege of the automatic stay, so it decided there are situations when a bankruptcy filing does not benefit from an automatic stay, at all.

If you would like to obtain additional information about Texas bankruptcy, explore your options, learn about the bankruptcy process or discuss your particular situation with one of our experienced Bankruptcy attorneys, please schedule a free initial consultation by calling us toll free at 877.345.6767 (Dallas – Fort Worth area), 866.715.1529 (Houston area) or 866.678.1900 (South Texas). If you prefer, you can also fill out our intake form and we contact you to schedule a consultation.

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I Can Understand Buying a Car Without A/C, But Not Without Turn Signals


This article may appear to be about the annoying people who change lanes and make turns without the courtesy and safety of using their turn signals. It’s not. It is about safety devices, designs and equipment that are found on consumer products.

Turn signals, seat belts, fire retardant children’™s pajamas, safety locks on guns and rifles, and shields and other protective covers are just a few of the safety devices, designs and equipment that consumers enjoy because of decades of litigation by trial lawyers on behalf of innocent victims. These safety devices, designs and equipment actually work when they are not tampered with, removed, circumvented or altered. So, if you buy a car with law-mandated safety equipment such as seat belts, why would you not use them? If you bought a table saw with a law mandated safety guard over the sharp, spinning blades, why would you remove? If you bought a gun with a safety lock, why would you not use it until ready to fire the gun? It is hard to understand, but many people do ignore safety devices, designs and equipment. Worse yet, these safety devices, designs and equipment are often tampered with, removed, circumvented or altered on a regular basis. Not only are all consumer protections lost at that point, but the ability to bring a lawsuit to recover for injuries and damages is severely impaired if not completely destroyed by such conduct. The consumer must respect not ignore – the warnings and safety devices, designs and equipment that are there for their protection.

Prescription drugs have safety devices, designs and equipment, too. Prescription drugs are dangerous and do have side effects, and need these safety devices, designs and equipment, called warnings. Warnings are contained in the œpackage insert that comes with the prescription either from the company or the pharmacists. Warnings work only when they are accurate, complete and adequate. Further, accurate, complete and adequate warnings work only when strictly followed: The drug must be taken as prescribed by the physician, and a prescription drug prescribed for one person must not be taken by someone else.

The drug companies must accurately and completely disclose all of a prescription drug’s dangerous side effects so the warnings accurately, completely and adequately warn the patient. Drug companies must also constantly update the warnings as new information is obtained. More times than not, however, the drug companies are not inclined to give accurate, complete and adequate warnings because more numerous and severe the warnings, the fewer prescriptions will be written for that drug. The prescribing physician will find a better, safer alternative drug that is equally effective without the same risks.

Litigation against the drug companies is based on inaccurate, incomplete and inadequate warnings, as well as manufacturing and design defects. The prescribing physician has the responsibility to discuss a prescription drug’s side effects with the patient, as well as the risk of those side effects and the benefits of the drug. It is only when the warnings that the physician has access to do not include all known dangerous side effects that a case exists against the drug companies. After all, we know all drugs have side effects. We as the patient have the absolute right to know what those side effects are so we can have that risk/benefit discussion with the physician and make the decision whether to take the drug. As a patient, we have the right to know what the drug company knows about their prescription drugs before we take it. After we take the dangerous drug and are injured by it, the questions becomes what did they know and when did they know it.

You can’t claim ignorance of the drug’s warnings any more than you can claim you bought the car without turn signals or that the seat belt is too uncomfortable to wear. All are safety devices that are there for your safety.

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