Source: https://lundinonchapter13.com/Content/Section/59.1
Timestamp: 2019-10-20 09:14:11
Document Index: 435495775

Matched Legal Cases: ['§ 59', '§ 59', '§ 109', '§ 109', '§ 109', '§ 362', '§ 362', '§ 109', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 105', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 362', '§ 21', '§ 109', '§ 25', '§ 109', '§ 22', '§ 109', '§ 25', '§ 109', '§ 23', '§ 109', '§ 25', '§ 109', '§ 362', '§ 362', '§ 432', '§ 362', '§ 60', '§ 362', '§ 362', '§ 61', '§ 362', '§ 432', '§ 362', '§ 60', '§ 362', '§ 362', '§ 61', '§ 362', '§ 9', '§ 60', '§ 362', '§ 61', '§ 362', '§ 432', '§ 60', '§ 432', '§ 60', '§ 362', '§ 432', '§ 60', '§ 432', '§ 60', '§ 432', '§ 60', '§ 362', '§ 432', '§ 60', '§ 60', '§ 362', '§ 432', '§ 60', '§ 362', '§ 432', '§ 60', '§ 434', '§ 61', '§ 433', '§ 362', '§ 61', '§ 362', '§ 362', '§ 433', '§ 61', '§ 362', '§ 434', '§ 61', '§ 61', '§ 434', '§ 61', '§ 432', '§ 60', '§ 433', '§ 61', '§ 432', '§ 60', '§ 433', '§ 61', '§ 346', '§ 158', '§ 362', '§ 362', '§ 362', '§ 363', '§ 362', '§ 362', '§ 362', '§ 362']

§ 59.1 In General
Cite as: Keith M. Lundin, Lundin On Chapter 13, § 59.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
One stated intent of the creditor coalition that drafted BAPCPA was to stop the “revolving door” of bankruptcy that permitted repeat and serial filings by consumer debtors. When Congress attacked this same issue in 1984, § 109(g) was the result: limits on eligibility for individual debtors when a prior bankruptcy case was dismissed within the preceding 180 days.1 Under § 109(g)(1), a willful failure to abide by a court order or to appear in proper prosecution of a bankruptcy case triggers the 180-day bar to eligibility.2 Under § 109(g)(2), voluntary dismissal after a request for relief from the stay bars refiling for 180 days.3
BAPCPA took a different approach to repeat filings: limit the automatic stay in the most recent case. The centerpiece of this strategy is new § 362(c)(3) and (c)(4).4 These new subsections are intricate. Grossly simplified: one prior bankruptcy case dismissed within a year—the debtor gets a 30-day stay that can be extended by proving good faith; more than one prior case dismissed within a year—no automatic stay unless the debtor proves good faith. Of course, the devil is in the details.
Counsel first has to determine whether § 362(c)(3) or (c)(4) applies when the debtor refiles within one year of one or more prior “pending . . . but . . . dismissed” bankruptcy cases.5 Joint debtors must be analyzed separately.6 There is disagreement whether a prior case dismissed because of a prepetition briefing failure under § 109(h) counts for § 362(c)(3) and (c)(4) purposes.7
If § 362(c)(3) is applicable, then there is the question: Which automatic stays terminate 30 days after the petition? There is fractured case law whether and what prepetition “actions” are predicate to termination of some or all of the automatic stay.8 Odd wording in § 362(c)(3) has produced robust debate whether property of the estate remains protected by the stay notwithstanding termination of other parts of the stay.9
Procedural issues abound when a refiling debtor collides with § 362(c)(3). Continuation of the automatic stay beyond 30 days after the petition requires notice and a hearing “completed” before expiration of the 30-day period.10 Negotiating the completion of a hearing within that 30-day period with proper notice and opportunity to object can be a daunting undertaking.11 Debtors who fail to extend the 30-day stay under § 362(c)(3)(B) have asserted § 105(a) and other platforms for continuation or reimposition of a stay.12
Extension of the stay beyond 30 days when § 362(c)(3) applies requires proof that the current case is filed “in good faith as to the creditors to be stayed.”13 Under some circumstances, there is a rebuttable presumption that the current case is not filed in good faith.14 The presumption can be rebutted by clear and convincing evidence of good faith.15 The courts are struggling to fill the void in the statute with respect to the meaning of good faith in this context.16
When § 362(c)(4) applies—two or more prior cases were pending and dismissed within the year17—then the entire § 362(a) stay does not arise except upon court order after a request. That request to impose a stay must be filed within 30 days of the petition.18 When § 362(c)(4) is applicable, imposing a stay requires proof of good faith as to creditors to be stayed.19 There is a rebuttable presumption that good faith is lacking in § 362(c)(4)(D) that is not identical to the rebuttable presumption that may apply when § 362(c)(3) is in play. Clear and convincing evidence of good faith is required to overcome the presumption when imposition of a stay is litigated under § 362(c)(4)(D).20
Section 362(c)(3) and (c)(4) are important in Chapter 13 practice. It is not uncommon for Chapter 13 cases to fail for reasons that resolve soon after dismissal. Chapter 13 debtors lose jobs. They get sick. They have accidents at work and sometimes fall out of grace for reasons that are very forgivable. Chapter 7 cases are sometimes dismissed by debtors who mistakenly believe they can manage their debt problems without bankruptcy. Section 362(c)(3) or (c)(4) is implicated anytime a Chapter 13 debtor refiles within a year of one or more prior dismissals. Debtors’ counsel must move quickly and decisively to extend the 30-day stay in § 362(c)(3) or to impose a stay in the first instance under § 362(c)(4), else creditor collection action is likely to destroy the refiled case.
Moving quickly deserves emphasis. First-day motions, like those filed in Chapter 11 cases, are perhaps a good model. Chapter 13 debtors should file with the petition a motion under § 362(c)(3)21 or (c)(4)22 as appropriate when there has been one or more prior cases that were dismissed within a year. Waiting into the 30-day period is foolish and dangerous because the hearing must be completed before expiration of 30 days after the petition for purposes of § 362(c)(3)(B)23 and a motion to impose a stay is untimely after 30 days after the petition under § 362(c)(4)(B).24 Getting court time will be a problem on the short notice required by these sections. Don’t delay.
One issue that generated little attention was the question whether the stay termination and extermination provisions in § 362(c)(3) and (c)(4) apply when the prior case(s) was filed and/or dismissed under pre-BAPCPA law. New § 362(c)(3) and (c)(4) make no distinction between prior cases that were filed and/or dismissed before or after BAPCPA. The effective-date provisions of BAPCPA applied § 362(c)(3) and (c)(4) only to refilings after October 17, 2005, but that rule did not reveal whether the one-year look-back includes pre-BAPCPA cases.
There was no obvious constitutional reason why a limit on the automatic stay could not be based on pre-effective-date events. The automatic stay is perhaps less in the nature of a protected “right” than discharge, and the discharge cases do not support the argument that an individual has a protected interest in an automatic stay in a subsequent bankruptcy case at dismissal of a prior case.25 This was not a very promising issue for debtors, and it evaporated on October 17, 2006.
1 See § 21.1 [ 180-Day Bar to Eligibility in 11 U.S.C. § 109(g)—In General ] § 25.1 180-Day Bar to Eligibility in 11 U.S.C. § 109(g)—In General.
2 See § 22.1 [ 11 U.S.C. § 109(g)(1)—Willful Failure to Abide by Court Order or to Appear in Proper Prosecution ] § 25.2 11 U.S.C. § 109(g)(1)—Willful Failure to Abide by Court Order or to Appear in Proper Prosecution.
3 See § 23.1 [ 11 U.S.C. § 109(g)(2)—Voluntary Dismissal after Request for Relief from Stay ] § 25.3 11 U.S.C. § 109(g)(2)—Voluntary Dismissal after Request for Relief from Stay.
4 11 U.S.C. § 362(c)(3) and (c)(4) provide:
(3) if a single or joint case is filed by or against 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)—
(4)(A)(i) if a single or joint case is filed by or against a debtor who is an individual under this title, and if 2 or more single or joint cases of the debtor were pending within the previous year but were dismissed, other than a case refiled under section 707(b), the stay under subsection (a) shall not go into effect upon the filing of the later case; and
5 11 U.S.C. § 362(c)(3) and (c)(4), discussed in §§ 432.1 [ When Does § 362(c)(3) Apply? ] § 60.1 When Does § 362(c)(3) Apply? and 433.1 [ When Does § 362(c)(4) Apply? ] § 61.1 When Does § 362(c)(4) Apply?.
6 See §§ 432.1 [ When Does § 362(c)(3) Apply? ] § 60.1 When Does § 362(c)(3) Apply? and 433.1 [ When Does § 362(c)(4) Apply? ] § 61.1 When Does § 362(c)(4) Apply?.
7 See § 9.5 Consequences of Ineligibility: Jurisdiction; Automatic Stay; Strike, Dismiss or Excuse?, § 60.1 When Does § 362(c)(3) Apply? and § 61.1 When Does § 362(c)(4) Apply?.
8 See § 432.2 [ Which Stays Terminate? ] § 60.2 Which Stays Terminate?.
9 See § 432.2 [ Which Stays Terminate? ] § 60.2 Which Stays Terminate?.
10 11 U.S.C. § 362(c)(3)(B), discussed in § 432.3 [ Timing, Procedure and Form for Extension of Stay ] § 60.3 Timing, Procedure and Form for Extension of Stay.
11 See § 432.3 [ Timing, Procedure and Form for Extension of Stay ] § 60.3 Timing, Procedure and Form for Extension of Stay.
12 See § 432.3 [ Timing, Procedure and Form for Extension of Stay ] § 60.3 Timing, Procedure and Form for Extension of Stay.
13 11 U.S.C. § 362(c)(3)(B), discussed in §§ 432.4 [ (Rebuttable) Presumption of Lack of Good Faith ] § 60.4 (Rebuttable) Presumption of Lack of Good Faith and 432.5 [ Proof of Good Faith ] § 60.5 Proof of Good Faith.
14 11 U.S.C. § 362(c)(3)(C), discussed in § 432.4 [ (Rebuttable) Presumption of Lack of Good Faith ] § 60.4 (Rebuttable) Presumption of Lack of Good Faith.
15 11 U.S.C. § 362(c)(3)(C), discussed in § 432.4 [ (Rebuttable) Presumption of Lack of Good Faith ] § 60.4 (Rebuttable) Presumption of Lack of Good Faith.
16 See § 434.2 [ Proof of Good Faith ] § 61.4 Proof of Good Faith.
17 See § 433.1 [ When Does § 362(c)(4) Apply? ] § 61.1 When Does § 362(c)(4) Apply?.
18 11 U.S.C. § 362(c)(4)(B), discussed in § 433.2 [ Procedure, Timing and Form for Imposing Stay ] § 61.2 Procedure, Timing and Form for Imposing Stay.
19 11 U.S.C. § 362(c)(4)(B), discussed in §§ 434.1 [ (Rebuttable) Presumption of Lack of Good Faith ] § 61.3 (Rebuttable) Presumption of Lack of Good Faith and 434.2 [ Proof of Good Faith ] § 61.4 Proof of Good Faith.
20 See § 434.2 [ Proof of Good Faith ] § 61.4 Proof of Good Faith.
21 See § 432.3 [ Timing, Procedure and Form for Extension of Stay ] § 60.3 Timing, Procedure and Form for Extension of Stay.
22 See § 433.2 [ Procedure, Timing and Form for Imposing Stay ] § 61.2 Procedure, Timing and Form for Imposing Stay.
23 See § 432.3 [ Timing, Procedure and Form for Extension of Stay ] § 60.3 Timing, Procedure and Form for Extension of Stay.
24 See § 433.2 [ Procedure, Timing and Form for Imposing Stay ] § 61.2 Procedure, Timing and Form for Imposing Stay.
25 See § 346.1 [ Student Loans ] § 158.2 Student Loans for discussion of analogous questions with respect to discharge.
In re Dyer, No. 12-8030, 2013 WL 987729, at *5-*8 (B.A.P. 6th Cir. Mar. 14, 2013) (unpublished) (Emerson, Harris, Lloyd) (Extension of stay in second case within a year under § 362(c)(3) is not a condition for confirmation of a plan; dismissal was not appropriate based solely on termination of stay under § 362(c)(3) when debtor can confirm a plan. In second case within a year, no one moved for extension of the automatic stay and the stay expired 30 days after the petition. Bankruptcy court sua sponte ordered debtors and their counsel to show cause why the case should not be dismissed and fees disgorged. Court denied confirmation, dismissed the case and ordered counsel to disgorge fees based solely on failure to seek an extension of the stay. "[A] Chapter 13 plan can be confirmed and carried through to discharge without the automatic stay in place. . . . [T]he risks inherent in carrying out a confirmed Chapter 13 plan without a stay in place are risks that the Bankruptcy Code allowed the Debtors to take . . . . [T]he Dismissal Order denied confirmation of the Debtors' plan and dismissed the Debtors' case for only one reason: that the automatic stay had terminated. The Bankruptcy Court thus employed an erroneous legal standard and abused its discretion. . . . [T]he Bankruptcy Court abused its discretion when it ordered disgorgement of Gunner's fees based on the mistaken belief that Gunner's failure to move for an extension of the stay necessitated the denial of confirmation and dismissal of the Debtors' case.").
Nelson v. George Wong Pension Trust (In re Nelson), 391 B.R. 437 (B.A.P. 9th Cir. July 26, 2008) (Pappas, Peterson, Klein) (Dismissal of Chapter 13 case does not moot appeal of adversary proceeding alleging violation of stay because relief can still be granted under § 362(k); however, no stay violation occurred when creditor conducted foreclosure sale because no stay arose in debtor's third Chapter 13 case under § 363(c)(4).).
In re Davis, No. 15-35948-H3-13, 2015 WL 9264315 (Bankr. S.D. Tex. Dec. 17, 2015) (Paul) (Citing Explorer Drilling Co. v. Martin Exploration Co. (In re Martin Exploration Co.), 731 F.2d 1210 (5th Cir. May 14, 1984) (Clark, Brown, Higginbotham), bankruptcy court can impose a stay notwithstanding that debtor may have missed time restrictions for extension or imposition of stay in § 362(c)(3) and (c)(4).).
In re Durham, 461 B.R. 139 (Bankr. D. Mass. Oct. 25, 2011) (Hoffman) (Motion to extend stay is moot when debtors are not eligible in second case filed within two months of prior dismissal. First case had been voluntarily dismissed after two stay relief motions.).
Cline v. Deutsche Bank Nat'l Trust Co. (In re Cline), 386 B.R. 344 (Bankr. N.D. Ala. Feb. 11, 2008) (Robinson) (Distinguishing Green Tree Financial Corp. v. Garrett (In re Garrett), 185 B.R. 620 (Bankr. N.D. Ala. 1995), when stay terminates or does not come into effect under § 362(c)(3) or (c)(4), confirmation of a plan does not upset mortgage holder's right to proceed with foreclosure in state court. In Kimberly Cline's seventh bankruptcy case and Jimmy Cline's fifth bankruptcy case, court extended automatic stay under § 362(c)(3) as to all creditors except Ameriquest Mortgage. With respect to Ameriquest, court extended stay temporarily until January 31, 2007, to allow parties to negotiate. During that negotiation, debtors confirmed a plan on January 26, 2007, that cured default and maintained payments with respect to Ameriquest. "[O]nce a court finds there is no sufficient reason to justify an extension or imposition of the stay under Section 362(c)(3) or (4), confirmation of a plan should neither change that finding nor interfere with the creditor's uninterrupted right to exercise its remedies post-confirmation without seeking additional relief from the court. . . . Section 1327(a) does not implicitly or otherwise overrule a pre-confirmation order allowing the stay to expire under Section 362(c)(3). The expiration or termination of the stay pursuant to Section 362(c)(3) transcends confirmation, and notwithstanding Section 1327(a) a creditor may continue to rely on such expiration or termination after confirmation when exercising its contractual and state court remedies.").
In re Butler, No. 05-43195, 2005 WL 6777062, at *1-*2 (Bankr. S.D. Ga. Nov. 15, 2005) (Davis) (Section 362(c)(3) applies notwithstanding that prior case was filed and dismissed before October 17, 2005. "[T]he problem of retroactivity does not arise when the operation of a statute draws upon antecedent facts. . . . The fact that the application of [§ 362(c)(3) and (4)] may cause an examination of bankruptcy filings that occurred prior to BAPCPA's effective date does not lead to the conclusion that prohibited retroactivity is occurring. Although the fact of previous bankruptcy filings is considered in the application of Sections 362(c)(3) and (4), it is a post-October 17, 2005 event (the filing of a new case) that triggers these two Sections.").