Massachusetts Agencies

Entry: Bankruptcy


If a bankruptcy is filed while an entry is in the process of ripening, the time limitation for entry to ripen (three years) will be extended for a period equal to the time during which the bankruptcy was pending. This is because during the bankruptcy there is an automatic stay. In re Paul , 67 B.R. 342 (Bkrtcy.D.Mass. 1986) the question of effect of the automatic stay was discussed:

[S]ecured creditors . . . are faced with a dilemma when a petition is filed as short time before their interests lapse. The automatic stay prevents them from taking further action to perfect their lien, but the same stay may not stem the advance of time which threatens to extinguish the perfection of their security interests existing at the time of the petition.

The Second Circuit has held that the effect of filing a petition is a two way street for creditors and debtors: "[I]n general no creditors' liens acquire validity after the filing of the petition . . . . It should equally follow, we believe, that liens good at this time do not lose their validity.