The automatic stay in bankruptcy is a bit more complicated than I realized–even after all these years. Oakland bankruptcy judge Roger Efremsky just taught me something new about it a moment ago. I had filed a chapter 7 case for a client who didn’t qualify for chapter 13. She received her discharge and in the meantime some positive financial changes occurred so that she was actually in a position to catch up on the mortgage on her home which was now in foreclosure.
I filed the second case for her, a chapter 13, and dutifully filed a motion to extend the automatic stay beyond 30 days as required by 11 U.S.C. § 362(c)(3)(B)–or so I thought! When I requested the default after 14 days and no creditor opposition, Judge Efremsky denied my motion as moot. The automatic stay already remained in effect beyond 30 days even without the motion.
It turns out that the 30-day stay termination provision only kicks in when a previous case was pending within the year before the filing of the second case and the first case was dismissed. If the debtor received a discharge in the first case, there was no dismissal and so § 362(c)(3) doesn’t apply.
Here’s the applicable language from the Bankruptcy Code:
(c) [I]f a single or joint case is filed by…a debtor who is an individual in a case under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending within the preceding 1-year period but was dismissed, other than a case refiled under a chapter other than chapter 7 after dismissal under section 707 (b)—
(B) on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors (subject to such conditions or limitations as the court may then impose) after notice and a hearing completed before the expiration of the 30-day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed…
There you have it. No dismissal of the first case means no termination of the automatic stay after 30 days in a second case. I have learned something new about the Bankruptcy Code. It’s time for me to go home and enjoy Thanksgiving with my family.
Dog photo courtesy of Luis García [GFDL or CC-BY-SA-3.0], via Wikimedia Commons
