CONSUMER BANKRUPTCY
BASIC and INTERMEDIATE CONSIDERATIONS
ALEJANDRO OLIVERAS RIVERA
CHAPTER 13 TRUSTEE
I-
INTRODUCTION
A- OUR GOAL
Our goal is to provide the attendees with a
basic understanding of Chapter 7 and 13 of the Bankruptcy Code[1]
from a consumer perspective. We will
also provide insight as to some matters of an intermediate degree of complexity
that may be encountered in either Chapter.
Our approach will take a dual perspective: we will examine the pertinent provisions from
the side of the debtor and that of a creditor.
In between, we will see the roles played by the Court and Trustees.
B- LEGAL FRAMEWORK
In our review we will make reference to the Code,
Federal Rules of Bankruptcy Procedure (FRBP) and to a lesser degree, the Local
Rules of Bankruptcy Procedure (LBR).
However, in spite of the fact that we shall refer to the LBR to a lesser
degree, we caution that they should always be examined when handling a
particular bankruptcy matter, since there could be one applicable to the issue
at hand. Moreover, we recommend that the
study method be one that assumes that for every Code provision there is a
corresponding FRBP and LBR. In this manner if they do exist, you will not
miss them.[2]
We alert to the fact that our Local Bankruptcy
Rules were recently revised. A first
draft was posted at the Bankruptcy Court’s website in January 2007. The two Chapter 13 Trustee’s for the District
of Puerto Rico prepared a joint commentary to the proposed rules that can be
found at their respective websites:
www.ch13sju.com
(Oliveras) or
www.ch13-pr.com (Carrión). On
C- THE TERM “CONSUMER BANKRUPTCY”
This presentation has been dubbed CONSUMER
BANKRUPTCY. The fact is that,
technically speaking, there is no such designation in the Code. The term evolves more from the
individuals/debtors that file, generally with consumer debts as opposed to corporate
entities with commercial debts. We will
see however that many Code provisions have a predicate in the consumer nature
of things.
D- TWO FUNDAMENTAL
PRINCIPLES
There are two fundamental operating principles
in bankruptcy: DISCLOSURE and NEGOTIATION. “The inherent
conflict between the twin goals of bankruptcy-appropriate relief for those in
trouble and equitable treatment for their creditors- ensures that it will
always be an area of contention. Report of the National
Bankruptcy Review Commission
E- THE TWIN GOALS OF BANKRUPTCY
1- FOR DEBTORS
Provide the honest but unfortunate debtors with
a fresh start in their financial/economic lives. Three major instruments the Code has to
accomplish this are:
2- FOR CREDITORS
Provide for a fair and equitable distribution
among all the creditors, of the debtors’ available assets. If a Debtor has assets subject to
distribution, the Code is set up in such a way that based on ranks (priorities)
and an order of distribution, the creditors similarly situated are similarly
treated.[9] This avoids, or does away, with the “race to
the court house”. The phrase is used to
describe the benefit received by that creditor who is first to sue the debtor
and attach his or her property for eventual execution for his (the creditor’s)
sole benefit. One additional way in
which the Code accomplishes the equal distribution among the creditors is by exercising
what are known as the avoidance powers of the trustee.[10]
F- STATISTICS
The numbers tell the story of the
Total
12,344
C
7 C
11 C
12 C 13
3,727 125 5 8,487
2006
Total
5,454
1,307 65 9 4073
II- SOME
HISTORY
In the Old Testament of the Bible and Hebrew
Scriptures,
Moses'
Laws prescribed that one "Holy Year" or "Jubilee Year"
should take place every half century, when all debts are eliminated and all
debt-slaves are freed, due to the heavenly command.
Moreover, the Hebrew law of debt
forgiveness can be found in the Bible at Deuteronomy 15:1–2 which instructs a
release of debt every seven years.
In
ancient
Greece, bankruptcy did not exist. If a father owed and he could not
pay, his entire family of wife, children and servants were forced into
"debt slavery", until the creditor recouped losses via their physical
labour. Many city-states in ancient Greece limited debt slavery to a period of
five years and debt slaves had protection of life and limb, which regular
slaves did not enjoy. However, servants of the debtor could be retained beyond
that deadline by the creditor and were often forced to serve their new lord for
a lifetime, usually under significantly harsher conditions.
The word bankruptcy is formed from the ancient
Latin bancus (a
bench or table), and ruptus (broken). A "bank" originally
referred to a bench, which the first bankers had in the public places, in
markets, fairs, etc. on which they tolled their money, wrote their
bills of exchange, etc. Hence, when a
banker failed, he broke his bank, to advertise to the public that the person to
whom the bank belonged was no longer in a condition to continue his business.
As this practice was very frequent in
Italy, it is said the term
bankrupt is derived from the
Italian
banco rotto, broken bank Others
choose rather to deduce the word from the
French
banque, "table", and route, "vestigium,
trace", by metaphor from the sign left in the ground, of a table once
fastened to it and now gone. On this principle they trace the origin of
bankrupts from the
ancient Roman mensarii or argentarii,
who had their tabernae or mensae in certain public places; and
who, when they fled, or made off with the money that had been entrusted to
them, left only the sign or shadow of their former station behind them.
Bankruptcy is also documented in the
Far East.
According to
al-Maqrizi, the
Yassa of
Genghis Khan contained a provision that
mandated the
death penalty for anyone who became bankrupt
three times.
The characteristic discharge of debts was
introduced to Anglo-American bankruptcy with the statute of 4 Anne ch. 17 in
1705, where the discharge of unpayable debts was offered as a reward to
bankrupts who cooperated in the gathering of assets to pay what could be paid
The 1978 Code[11]
has been characterized as a protective legislation for the honest but
unfortunate debtor.[12] The
concept of “Fresh Start” summarizes not only a purpose of the legislation but
it is also a label given to certain provisions of the Code that further the
reorganization of the Debtor.[13] Two
salient features configuring the “Fresh Start” are the Discharge[14] and the Automatic Stay.[15]
For years
after 1978, there were areas of contention growing between creditors and
debtors.[16] On
Diverse views
were presented during the
BAPCPA made
sweeping changes to many provisions of the Code and introduced new concepts,
such as the “means test” in section 707(b). Mr. Clifford E. White[18]
feels that: “In many ways, means testing is the cornerstone of the new bankruptcy
reform law.” It can be
said that the pendulum has moved from the pro-debtor side to the pro-creditor
side.
When we
examine BAPCPA we often find ourselves in a predicament similar to that of
A- THE STRUCTURE OF THE BANKRUPTCY CODE
The Code is divided in Chapters. There are a total of nine (9) Chapters. Each Chapter is identified with an odd number
except for the Family Farmer or Family Fisherman, which is Chapter 12.
Chapter 1, contains the General Provisions. Here
you will find such things as Definitions[19],
eligibility requirements[20]
and, the all mighty Equity Powers of the Court.[21]
Chapter 3 refers to Case Administration. Some areas covered are: eligibility to serve as a trustee[22],
Employment of Professional Persons[23], meeting
of creditors[24],
adequate protection[25],
automatic stay[26], use,
sale or lease of property[27]
and, obtaining credit[28]
Chapter 5 deals with creditors, the debtor and
the estate. Here we find the very
important subject of the filing and allowance of proof of claims[29],
Determination of secured status[30],
Debtor’s duties[31], some
of which if not complied with in a certain period of time, may result in the case
being dismissed automatically, the
always troublesome concept of property of the estate[32],
etc.
Chapter 7 is the liquidation chapter.
Chapter 9 is the adjustment of debts by a municipality.
Chapter 11 deals with reorganizations. Commonly associated with businesses, however,
an individual can file under this chapter.
A salient feature of this Chapter is that the debtor has to prepare a
disclosure statement[33]
containing “adequate information” with a reorganization plan, or summary
thereof, which if approved by the Court is sent to creditors who can then
actually vote for or against the plan.
Chapter 12 we already mentioned.
Chapter 13 Adjustments of Debts of an
Individual with Regular Income. This is your
Trustee’s favorite Chapter. Commonly
referred to as “the wage earner’s chapter”.
However, as we will see later on, self employed individuals can also
file under this chapter. The basic
motive behind this Chapter is the desire of the individual to repay all or part
of his debts with future income, instead of going into a liquidation under
Chapter 7.
And lastly, Chapter 15 Ancillary and other
Cross-Border Cases. A Chapter far
removed from Consumer Bankruptcy. So
much so, that I just want you to know that it is there and say nothing
more.
Chapters 1,,3 and 5 have provisions that will
find applicability in Chapters 7,11,12 & 13.[34] These last four chapters are designed for
debtors to proceed under whichever the combination, of their desire, eligibility
and other factors may lead to.
B- SELECT PROVISIONS OF CHAPTER 1 (GENERAL
PROVISIONS).
1. Section
101 provides several definitions. We
have definitions for characters such as accountant, attorney, creditor, disinterested
person, individual with regular income, relative and other esoteric things such
as: claim, corporation, current monthly income (
2. Section
102 Rules
of construction has an interesting sub-division. It is subdivision (1).
"after notice and a hearing", or a similar phrase-
(A) means after such notice as is appropriate in the particular
circumstances, and such opportunity for a hearing as is appropriate in the
particular circumstances; but
(B) authorizes an act without an actual hearing if such notice is given
properly and if-
(i) such a hearing is not requested timely by a party in interest; or
(ii) there is insufficient time for a hearing to be commenced before
such act must be done, and the court authorizes such act;
The
above means that the circumstances will fashion the content of notice whether
it be a summary or the inclusion of the full document such (such as the entire
text of a stipulation/compromise agreement.)
It also fashions the method of notice:
personal; telephonic; fax, e-mail; snail mail. We refer you to FRBP 2002 Notices to
Creditors, Equity Security Holders, United States, and United States Trustee
which provides the notice period and the events that require notice as well as FRBP 9007 General Authority to Regulate Notices, which sets the general rule
on how and to whom serve with notice, when any other provision or rule does not
set a specific period or method.
The
practical theme to have in mind regarding notice and section 102 is two
fold. First, be aware that although the
Code or Rules may set a specific period as an opportunity to object, that
period, depending on the circumstances, may be shorthend, and if so, the time
you have to react thereto, is less.
Second, it could happen, that the manner in which notice is given, is
more expeditious than customary. Usually,
notice is given by mail, but it could happen that a telephone call, in
extraordinary circumstances would suffice.
Therefore you have to be alert.[35]
Section
102 also has a very simple rule of construction whose simplicity is only
surpassed by its mystery. Section 102 (2)
informs us that a: “claim against the debtor"
includes claim against property of
the debtor.” Later on, we will see the
impact this has, when we examine section 362 of the Code (automatic stay) and
property of the estate (section 541, generally and 1306 in the context of
Chapter 13 specifically.)
3. I suggest you read the definitions of
“claim” and “community claim”[36],
“creditor”[37], “debt”[38],
“domestic support obligation”[39]
(DSO), “judicial line”[40]
“lien”[41],
“median family income”
[42],
“person”[43]
4. Some
definitions under section 101
"Consumer debt" means debt incurred by an individual primarily
for a personal, family, or household purpose[44]. This is the first mention in the Code of the
term consumer, that begins to shape the concept of Consumer Bankruptcy. The key in the definition is the purpose or
intended use of the consideration of the debt.
If I use my personal credit card to purchase supplies for the small
school supply store that I operate as a d/b/a that debt would not be a consumer
debt. What if all of my liabilities come
out to be 49% business and 51 % consumer?
"Individual with regular income" means individual whose income
is sufficiently stable and regular to enable such individual to make payments
under a plan under chapter 13 of this title, other than a stockbroker or a
commodity broker”.[46]
The cornerstone of a Chapter 13. In order to file a Chapter 13 the Debtor must
have some sort of regular income. In
Chapter 7 the Debtor may or may not have income after the date of filing and
yet the Chapter 7 can proceed. A Chapter
13 can not proceed if the debtor has no regular income.
5.
Regarding §104 suffice to say that throughout the Code there are certain
dollar amounts that serve as thresholds for several purposes (for example,
eligibility and exemptions). Every three
years these amounts are revised. The
next revision will occur in April 2010.
6.
Pre filing Credit Counseling briefing.[47] A BAPCPA amendment to the Code as to who can
be a Debtor now requires that a credit briefing (commonly referred to as
“credit counseling”) be received by the individual in the 180 days preceding
the date of the filing of the petition.
This spawned a considerable number of cases related to the exception when
exigent circumstances are present to waive the requirement. Some courts found that filing on the day of
the foreclosure on the mortgage was not exigent circumstances warranting the
waiver.[48]
Others have found that to file on the same day that the briefing is taken is
also a non compliance with the law.[49]
IV-
BAPCPA brought us in section 332 of the Code a
new player. The name of the player is Consumer
Privacy Ombudsman. He will climb up
to the stage if the Debtor or a trustee is to sell, use, or lease estate
property under section 363 of the Code and there was in place a policy
prohibiting the transfer of personally identifiable information. If the sale is inconsistent with that policy,
the United States Trustee has to appoint a
Consumer Privacy Ombudsman
[50]
V- THE
Here we will review some of the
changes made by BAPCPA to the automatic stay.
As indicated earlier the
automatic stay is one of the mechanisms the Code has to further the goal of
Debtor reorganization. Under the Code,
once a bankruptcy petition is filed an order automatically ensues by operation
of law (in other words, no written order per se is entered on docket) staying,
among others, all proceedings that have as their purpose the collection of a claim against the debtor or property of the
estate. The distinction between
collecting against the DEBTOR or the
PROPERTY OF THE ESTATE is important
as we shall see later on.
Subsection (a) of the
automatic stay[51] we shall call the “banning” section. Generally, it “bans” (prohibits) ceratin acts
be taken against the debtor or the estate.
It reads as follows (with our emphasis):
“(a) Except as provided in subsection (b) of this section, a petition
filed under section 301, 302, or 303 of this title, or an application filed
under section 5(a)(3) of the Securities Investor Protection Act of 1970,
operates as a stay, applicable to all entities, of-
(1) the
commencement or continuation, including the issuance or employment of process,
of a judicial, administrative, or other action or proceeding against the DEBTOR that was or could have been
commenced before the commencement of the case under this title, or to recover a
claim against the debtor that arose
before the commencement of the case under this title;
(2) the
enforcement, against the debtor or against PROPERTY
OF THE ESTATE, of a judgment obtained before the commencement of the case
under this title;
(3) any act to
obtain possession of property of the estate or of PROPERTY FROM THE ESTATE or to exercise control over property
of the estate;
(4) any act to
create, perfect, or enforce any lien against property of the estate;
(5) any act to
create, perfect, or enforce against PROPERTY
OF THE DEBTOR any lien to the extent that such lien secures a claim that
arose before the commencement of the case under this title;
(6) any act to
collect, assess, or recover a claim against the debtor that arose before the commencement of the case under this
title;
(7) the setoff
of any debt owing to the debtor that
arose before the commencement of the case under this title against any claim
against the debtor; and
(8 the commencement or continuation of a
proceeding before the United States Tax Court concerning a corporate debtor’s
tax liability for a taxable period the bankruptcy court may determine or
concerning the tax liability of a debtor
who is an individual for a
taxable period ending before the date of the order for relief under this title.
Four (4) subjects
are protected by the automatic stay:
1- the DEBTOR;
2- PROPERTY OF THE DEBTOR;
3- PROPERTY OF THE ESTATE and;
4- PROPERTY FROM THE ESTATE
[52]
The debtor is easily identifiable. It is
the individual or person that files for bankruptcy. The term person is defined in section 101
(41). Therefore a Debtor in bankruptcy
can be an individual (human being) or a corporate entity under the rubric of
person.
The second subject is property of the debtor. We
must be referring to something that is not property of the estate or property
from the estate. Under the Code, and
as part of the “Fresh Start” concept we have, exempt property. Section
522(d) allows Debtors to exempt from the estate (hence not to be considered by
a Trustee administering the case) certain values on specified property. One such allowed exemption is the debtor's aggregate interest, not to exceed $20,200.00 in
value, in real property or personal property that the debtor or a dependent of
the debtor uses as a residence, in a cooperative that owns property that the
debtor or a dependent of the debtor uses as a residence, or in a burial plot
for the debtor or a dependent of the debtor.
An
example will illustrate the point.
Debtor has a residence worth $100,000.00. It owes on the mortgage $81,000.00. The equity in the property is
$19,000.00. Utilizing section 522(d)
Debtor can exempt the $19,000.00. In
terms of section 362(a) that value ($19,000.00) is property of the debtor. Consequently any act to create, perfect, or enforce against property of the debtor any lien to the
extent that such lien secures a claim that arose before the commencement of the
case is prohibited.
The third protected
subject of the automatic stay is PROPERTY OF THE ESTATE which in turn is defined in section 541. Generally, it is all
legal or equitable interests of the debtor in property as of the commencement
of the case. In Chapter 12 and 13 property of the estate also includes earnings from services performed by the debtor after
the commencement of the case. Not so in
Chapter 7.
Lastly we have PROPERTY FROM THE
ESTATE. Knowing already what is
property of the estate, it should be easy to arrive at what is property from the estate. Two examples: A commercial building is property of the
estate. It is all rented out. The rental income is property from the estate. Second
example: The debtor has a Certificate of
Deposit. The CD is property of the
estate. The interest earned by the CD is
property from the estate.
B- EXCEPTIONS TO THE AUTOMATIC STAY
There are exceptions to the application of the automatic stay. These are particular circumstances, that if
present, the automatic stay does not apply.[53] Under
the 1978 Code we had seventeen (17) exceptions.
Under the 2005 reform to the Code the exceptions have increased to
twenty seven (27)[54] and some of the original seventeen (17) have
suffered amendments.
Among the most
notable exceptions to the automatic stay we have:
-
the commencement or continuation of a criminal action or
proceeding against the debtor;
-
the
commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's or organization's
police and regulatory power, including the enforcement of a judgment other than
a money judgment, obtained in an action or proceeding by the governmental unit
to enforce such governmental unit's or organization's police or regulatory
power;
-
of any act by a lessor to the debtor
under a lease of nonresidential real property that has terminated by the
expiration of the stated term of the lease before the commencement of or during
a case under this title to obtain possession of such property.
Of
the new exceptions to the automatic stay, we will discuss, very briefly, just
two (2) due to the limited scope of this writing. Exception number twenty (20) reads:
“ under subsection (a), of any act to enforce any lien against or
security interest in real property following entry of the order under
subsection (d)(4) as to such real property in any prior case under this title,
for a period of 2 years after the date of the entry of such an order, except
that the debtor, in a subsequent case under this title, may move for relief
from such order based upon changed circumstances or for other good cause shown, after notice and a hearing;
This means that in a prior case, the creditor obtained an in rem order
lifting the stay, which order will be enforceable in the subsequent case. In rem orders were creatures of jurisprudence
until 2005 when they found their way into the Code thru BAPCPA.[55] In order to grant an in rem relief from stay
order, the Court has to find that the filing of the petition was part of scheme to delay, hinder, and defraud
creditors that involved either transfer of all or part ownership of, or other
interest in, the real property without the consent of the secured creditor or
court approval or the Court can find that that there have been multiple filings
affecting such property. Then the
creditor has to record the Order in the Registry of Property so it be binding
in any subsequent case filed within the
next two years.
Exception twenty one (21) states:
“ under subsection (a), of any act to enforce
any lien against or security interest in real property—
(A) if the debtor is ineligible under section
109(g) to be a debtor in a case under this title; or
(B) if the case under this title was filed in
violation of a bankruptcy court order in a prior case under this title
prohibiting the debtor from being a debtor in another case under this title;
What
is being described by the above exception usually comes about when the Debtor
had a prior case and was dismissed “with prejudice” to filing another case
(during a certain period of time, be it 180 days or a year) and yet, the Debtor
goes ahead and files the subsequent case within the proscribed period of time.
C- THE “FAMILY LAW
EXCEPTION”
Because
we believe that the amendments made by BAPCPA to the second exception listed in
§362(b) will impact a significant number of family law cases in
“The term
`domestic support obligation' means a debt that accrues before, on, or after
the date of the order for relief in a case under this title, including interest
that accrues on that debt as provided under applicable nonbankruptcy law
notwithstanding any other provision of this title, that is—
(A) owed to or recoverable by—
(i) a spouse,
former spouse, or child of the debtor or such child's parent, legal guardian,
or responsible relative; or
(ii) a
governmental unit;
(B) in the nature of alimony, maintenance, or
support (including assistance provided by a governmental unit) of such spouse,
former spouse, or child of the debtor or such child's parent, without regard to
whether such debt is expressly so designated;
(C) established or subject to establishment
before, on, or after the date of the order for relief in a case under this
title, by reason of applicable provisions of--
(i) a separation
agreement, divorce decree, or property settlement agreement;
(ii) an order of
a court of record; or
(iii) a
determination made in accordance with applicable nonbankruptcy law by a
governmental unit; and
(D) not assigned to a nongovernmental entity,
unless that obligation is assigned voluntarily by the spouse, former spouse
child of the debtor, or such child's parent, legal guardian, or responsible
relative for the purpose of collecting the debt.
Now we
can examine the second exception to the automatic stay.
“The filing of a bankruptcy
petition does not operate as a stay;
“(2) under subsection (a)—
(A)
of the commencement or continuation of a civil action or proceeding—
(i) for the establishment of paternity;
(ii) for the establishment or modification of an order
for domestic support obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of a marriage, except to the
extent that such proceeding seeks to determine the division of property that is
property of the estate[56]; or
(v) regarding domestic violence
(B) of the collection of a domestic support obligation
from property that is not property of
the estate.
(C) with respect
to the withholding of income that is
property of the estate or property of the debtor for payment of a domestic
support obligation under a judicial or administrative order or a statute;
(D) of the
withholding, suspension, or restriction of a driver's license, a professional
or occupational license, or a recreational license, under State law, as specified
in section 466(a)(16) of the Social Security Act;
(E) of the
reporting of overdue support owed by a parent to any consumer reporting agency
as specified in section 466(a)(7) of the Social Security Act;
(F) of the
interception of a tax refund, as specified in sections 464 and 466(a)(3) of the
Social Security Act or under an analogous State law; or
(G) of the
enforcement of a medical obligation, as specified under title IV of the Social
Security Act
This
second exception to the automatic stay is a major rewrite of the prior
language. Section 2(A) subsections (iii)
(iv) and (v) are new additions to this exception. Likewise, subsections (C) thru (G).
Subsection
(A)(iv) in particular is a welcomed clarification for practitioners in both
fields; bankruptcy and family law.[57] It is now clear that the automatic stay in
the case of a Debtor/Spouse does not stay the commencement or continuation of a
divorce proceeding by the non-filing spouse.
Likewise, a divorce proceeding under the aegis of mutual consent where
the couple does not have conjugal property to divide among them, would not be
stayed.
However,
if a couple, were to prosecute their divorce under mutual consent and they have
conjugal property and, that property in turn is property of the estate, it would be stayed as to the division of property
aspect.
Generally, under
the
We
recognize that in certain divorce cases, when dealing with property issues,
time is of the essence. However, we
favor the cautionary road of seeking bankruptcy court approval by way of a
motion to modify the say to allow for the filing of a provisional remedies
motion in the
“Upon request of a party in
interest, the court, with or without a hearing, shall grant such relief from
the stay provided under subsection (a) of this section as is necessary to
prevent irreparable damage to the interest of an entity in property, if such
interest will suffer such damage before there is an opportunity for notice and
a hearing under subsection (d) or (e) of this section.”
To
conclude our review of this second exception to the automatic stay, we must
bear in mind the fine distinctions among interrelated sections, identify them
and avoid the pitfalls they may pose.
For example, section 362(a)(6) tells us that the automatic stay applies
to any act to collect, assess, or recover a claim against the debtor that arose before the
commencement of the case under this title. On the other hand section 362(b)(2)(C) excepts from the automatic stay the
withholding of income that is property
of the estate or property of the
debtor for payment of a domestic support obligation under a judicial or
administrative order or a statute. What subject is missing from the 362(b)(2)(c)
exception?[59]
D- LIMITATIONS TO THE
AUTOMATIC STAY
Let us
now review what may be labeled as LIMITATIONS to the automatic stay.[60]
We now
have section 362(c)(3) which states:
“(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)—
(A) the stay under subsection (a) with respect to any action taken with
respect to a debt or property securing such debt or with respect to any lease
shall terminate with respect to the debtor on the 30th day after the filing of
the later case;
In
other words, if the current case of the debtor is the second within a period of
one (1) year, where the prior case was dismissed (not converted or completed)
then as to creditors who had taken action against the debtor the stay will last
for just thirty (30) days. However the
debtor has the ability to petition the Court to extend it beyond the mentioned
thirty (30) days. Please note the
wording of this new limitation. It
states “as to the Debtor”. We go back to beginning of this exposition where
we detailed the four (4) subjects of the automatic stay; 1-
the debtor; 2- property of the estate; 3- property
from the estate and; 4- property of
the debtor. Bear in mind also the
definition we examined in section 102 (claim against the Debtor includes claim
against property of the debtor). As you
can see the wording of this limitation has as its subject the Debtor, consequently the limitation
does not apply to property of the estate
or ; property from the estate. This is the holding of In Re Jumpp 356 B.R. 789 (
Pitfalls
for the debtor: TIMING. If Debtor is to move
the Court to extend the stay, it has to be done soon after the filing of the
case since the Code requires “…after
notice and a hearing COMPLETED BEFORE
the expiration of the 30-day period. General
Order 05-12 regulates the content of the motion, time for filing (with the
bankruptcy petition or within three days thereafter) and; to whom notice must
be given (all parties in interest). A
motion to extend the stay filed on the 31st day after the fling of
the petition was found to be untimely in the case of In re Russ 2006 WL 2683174
(Bankr. N.D. la
Interestingly, the Code does not appear to l