Motion to Extend the Automatic Stay

One of the most important protections bankruptcy affords - and one could make the argument that it is the most important - is the protection afforded debtors in the form of the automatic stay. Pursuant to 11 U.S.C. 362, the filing of a bankruptcy case automatically operates as a stay to almost all debt collection proceedings. These include (all listed in 362(a)(1)), lawsuits or other actions against the debtor, enforcements of judgments against the debtor in nearly any fashion, or generally any action taken against a general debt or in furtherance thereof.

Debtors take advantage of this protection in every single bankruptcy filing. Whether it is utilizing it to avoid creditor action, to stop a wage garnishment, or to unfreeze a bank account, the result is the same: the debtor is now afforded that opportunity to take a deep breath and restart their financial life without creditor harassment.

Issues arise, however, when there are repeat bankruptcy filings, especially in Chapter 13 bankruptcies. Under 362(c)(3), if a Chapter 13 is refiled within one year of a previous dismissal, the automatic stay is only "automatic" for 30 days. After 30 days, if there has been no motion filed by the debtor's attorney and/or no notice and hearing on the same, the automatic stay will expire and creditors can move against their debts.

The solution, of course, is for the debtor's attorney to file a motion to extend the automatic stay. Time is of the essence on these motions because proper noticing guidelines must be adhered to. Good practice is to have this motion filed the same day the new petition is filed, in order to ensure that the motion is heard and approved by the judge within 30 days. This motion must be accompanied by an affidavit, signed by the debtor and notarized, setting forth the substantial positive change in circumstances that makes the chances that this particular Chapter 13 bankruptcy is successful.

This is a complicated matter that is essential to the success of the debtor's Chapter 13 case. Make sure to contact an experienced Bankruptcy attorney to discuss the filing of such a case.