What effect does Bankruptcy Code’s automatic stay provision have on conditions of a criminal sentence?

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22nd Oct 2012

What effect does Bankruptcy Code’s automatic stay provision have on conditions of a criminal sentence?

Defendant was ordered to pay restitution after being convicted for bank fraud and tax crimes, and filed for bankruptcy after initial sentencing. Defendant (and now debtor) argued that the automatic stay temporarily halted his obligation to pay restitution and barred the district court from revoking his probation for nonpayment.

The Second Circuit Court of Appeals found that court-ordered conditions of a criminal sentence or proceedings to address violations of those conditions were expressly excepted from the automatic stay because they constituted a “continuation of the criminal action or proceeding.” United States v. Colasuonno, Circuit No. 11-1188 slip op. (2nd Cir. Oct. 12, 2012)

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