If you are filing a Chapter 13 bankruptcy case in Chicago and in the prior year you have had two or more cases dismissed, then you are going to want to impose the Automatic Stay in your current filing. By the fact that you have had two or more bankruptcy cases dismissed within a calendar year, you are basically telling the world that you do not have the ability to reorganize under Chapter 13 successfully. For this reason, when the law was changed, the Congress stated that upon a third filing where to prior cases were dismissed within the prior year, there is no Stay in effect at the time of filing. This means that a sheriff’s sale can continue, a repossession can continue, any type of collection efforts can continue despite the fact that a Chapter 13 bankruptcy case has been filed.
What must be done is a motion must be brought to impose the Automatic Stay. When you bring a Motion to Imposed the Automatic Stay, you are likely to get some backlash or resistance from creditors, the court and the Chapter 13 trustee. In a recent filing that I did, a Chapter 13 bankruptcy client had had two Chapter 13 bankruptcy cases dismissed within one year, of filing this current Chapter 13. Since there was a vehicle involved, we were concerned that the auto, which we wanted to reorganize through the Chapter 13 plan, may be repossessed while in the process because there’s no Stay upon the filing of the third case. We quickly brought a Motion to Impose the Stay and brought it in front of the Honorable Judge Goldgar. In that case, there were no creditors that opposed our motion to impose the stay. However, the Chapter 13 trustee raised the issue to the judge that the debtor had two prior cases dismissed and wanted to see this debtor go on payroll control.
Payroll control is where the trustee payment is going to be deducted immediately or automatically out of the debtor’s pay from his employer. In the prior two cases, the debtor had the ability to make the payments on his own without the payroll control order being in place.
Since the trustee raised this issue to the court, the court insisted that payroll control is going to be ordered in exchange for the court’s willingness to impose the Automatic Stay. Thus, we had a case where no creditor was objecting. The Motion to Impose the Stay was filed and brought before the court but since the trustee and the judge had a problem with the prior cases, payroll control was ordered. Now, in the long run, this is probably a good thing for the debtor in that the Chapter 13 trustee payments will be made provided the debtor states employed. In the prior cases, it was up to the debtor to make those payments and certain things came up where the debtor decided to divert the money for whatever reason, emergency or otherwise, towards items other than the Chapter 13 plan. In this case, the Chapter 13 plan payments are going to be made from the employer so we know as long as the debtor stays employed, we are going to have success.
The point I’m making is that payroll control had nothing to do with the Motion to Impose the Automatic Stay. However, when you put yourself in the position where you don’t have a stay in place, you are subject to the court’s will. If you run into a situation where you are filing multiple bankruptcy cases, you put yourself in a position where creditors can object, the court can mandate payroll control or the court can just denied the motion altogether.
My advice is to take Chapter 13 cases very seriously. If you are a debtor in Chapter 13, do whatever you can to make that plan payment. You have to sacrifice in other areas of your life to make the Chapter 13 work. If you don’t make the Chapter 13 work, your case is going to get dismissed, you’re going to have to refile, you’re going to have to pay more fees and you are subject to the court’s scrutiny on whether or not they should grant the motion at all.
