11 U.S.C. §§ 105, 362(c); Automatic Stay; Extension of Stay for Repeat Filer
In re Whitaker, 2006 Bankr. LEXIS 796, Case No. 05-1416 (Bankr. S.D. Ga. April 20, 2006) (Dalis)
Debtors filed a Chapter 13 petition after the effective date of the BAPCA. The filing was their second within a year, the first case having been dismissed after the husband was laid off from his job. Debtors’ lawyer filed for an extension of the automatic stay pursuant, but such motion was not filed until 27 days after the petition date, and a hearing was not held within thirty days of the petition date. No objections to the relief requested were filed.
The court’s detailed opinion began by noting that the short trigger for filing a motion, requesting a hearing and obtaining a hearing date may violate the due process and equal protection clauses of the Constitution. A debtor may only have a window of a few days to file their motion, provide proper notice to all parties, and get on the court’s calendar (which may be entirely beyond the debtor’s control). However, only an Article II court may overturn a statute on these grounds.
The court then discussed the language of § 362(c) insofar as it applied to repeat filers. Section 362(c)(4), which applies to debtors who have had pending more than one prior case in the previous year, provides that the stay does not go into effect at all but there is no 30 day limitation on requesting imposition of the stay. Debtors who have filed only one prior case in the previous year have a strict 30 window in which to request an extension of the stay and the court must hold a hearing in that window. § 362(c)(3). Under the plain language of these statutes, the debtors were ineligible for relief under either subsection.
Notwithstanding debtors’ ineligibility, the court discussed the good faith requirement of 362(c)(3)(C). Because the statute itself contains the evidentiary burden, the court declined to look to the good faith standards of § 1307(c) or § 1325(a), as other courts have done. The court concluded that the prior dismissal of the debtors’ case was due to the loss of the joint debtor’s job. As both debtors are now working and making sufficient income to fund a 100% plan, the presumption of bad faith was rebutted.
Notwithstanding the debtors’ ineligibility for an extension or re-imposition of the automatic stay, the court exercised its broad authority under § 105 to re-impose the stay. No objections were filed to the debtors’ motion, and a dismissal may lead only to another filing and move for re-imposition under §362(c)(4)(B). Moreover, as the debtors have proposed a 100% plan, both debtors and the estate may be harmed if the stay were not re-imposed.
Author Note: While Judge Dalis raises several significant and valid points, including the arguably better treatment of multiple repeat filers, it appears that he is using the broad authority of § 105 to effectively overturn and subvert the clear provisions of §362 and would impair rights or create additional rights not provided for in the Code. See, e.g., Tucker. However shortsighted Congress may have been, their intent and language appears to be clear. However, Judge Brizendine has also used similar reasoning to extend the stay in Reed.
