In a Chapter 13 bankruptcy case, upon filing, there is a creation of the Automatic Stay which protects the debtor against certain actions by creditors. If the debtor is filing a bankruptcy case where a prior case was dismissed within the last year, then the Automatic Stay unless extended, will expire after 30 days. This is a critical point because if a debtor files a Chapter 13 bankruptcy after a case has been dismissed within the last year, and the attorney does not bring a Motion to Extend the Automatic Stay, then the Stay will in fact be eliminated after 30 days from filing.
What this means to a debtor is that a secured creditor, in many cases a vehicle or a mortgage company, can pursue the collateral or pursue the debtor if the Stay is not extended. There are some judges that feel that the Stay is extended only to the debtor, others feel only to the debtor’s estate and others feel towards both. The problem with doing nothing is that you risk the chance that beyond the 30 day protection of the Automatic Stay, creditors will attempt to collect upon the debtor or recover collateral secured. You do not want to be a debtor in an ongoing case proceeding without the protection of the automatic stay. It is a very uncomfortable feeling where you have to hope the creditor does not decide at some point in the case to pursue the debtor or the debtor’s estate.
What has to happen is, your attorney must bring a Motion to Extend the Automatic Stay within 30 days of filing, otherwise it cannot be extended by Motion. The timing here is critical because the dates matter and if you missed that date by a day, the court cannot extend the Automatic Stay. Without the Automatic Stay being extended, your client or the debtor is at risk of having property repossessed, or being collected upon in certain circumstances.
So, if you are filing a second bankruptcy case under Chapter 13 where a prior case was dismissed within the last year, you must bring a Motion to Extend the Automatic Stay within 30 days of filing, otherwise the Automatic Stay will expire 30 days after filing, putting the debtor at risk. Additionally, if you are filing a second case within one year, you want to figure out what went wrong in the prior case so that it does not happen again. Chapter 13 is a process with specific things to do and things to not do. You want to make sure that you have the system of success down pat with your second filing. When there are multiple filings, creditors, the Trustee and the court seem to be less lenient on the debtor. Most importantly, make sure that you are up to date or even ahead on your monthly Trustee payments. Nothing will end a case faster than non-payment or non-timely payment to the Trustee. This is especially true on a second or third filing.
