Extending or Imposing the Automatic Stay

Pursuant to 11 USC 362, the filing of a bankruptcy petition serves to automatically stay certain activities against the debtor. These activities, outlined in 362(a), include any judicial action that can be taken against the debtor in terms of debt collection, the enforcement of a pre-petition judgment, or any action to collect the property of the bankruptcy estate or things along those lines. The stay is automatic upon filing, except for certain instances where there have been repeated filings.

When Can An Automatic Stay Be Terminated?

The first instance, found in 362(c)(3), occurs if the debtor has had one case dismissed other than a Chapter 7 under 707(b) within the one year prior to filing. Here, the automatic stay will terminate after 30 days. The debtor can file a motion with the court to extend the stay pursuant to 362(c)(3)(B), but there must be notice and a hearing within 30 days of filing the case. In this instance, the debtor needs to demonstrate to the court that the new case was filed in good faith.

When Will Automatic Stay Not Go Into Effect?

If the debtor has had two or more cases dismissed other than a Chapter 7 dismissed under 707(b) within one year prior to filing the stay, pursuant to 362(c)(4) the automatic stay will not go into effect. Under 362(c)(4)(B), if within 30 days the debtor moves the court with proper notice and hearing, the court may order the stay to take effect in the case as to any or all creditors but again, only after good faith. This requires persuasion of the court because, under 362(c)(4)(B), the case is presumptively filed not in good faith.

These matters require the attention of a Chicago bankruptcy attorney, as the motions need to be filed immediately upon filing to ensure that proper notice and hearing are granted and the motion gets heard in time.