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Serial Filing and Automatic Stay

§ 362(c)(3) provides that if a Chapter 7, 11,or 13 case is filed within one year of an earlier dismissed case, the automatic stay in the second case terminates 30 days after the filing, unless a party in interest shows that the second case was filed in good faith with respect to the creditor sought to be stayed.

If a second repeat filing takes place within the one-year period, then, under §362(c) (4), the automatic stay will not go into effect.  The court is required promptly to enter an order confirming the inapplicability of the stay on request of a party in interest.  Similar to the situation with §362(c)(3),a party in interest may obtain imposition of the stay by demonstrating that the third filing is in good faith with respect to any creditor sought to be stayed.

For both second and third filings within one year, the circumstances generate a presumption that the new filing was not made in good faith, and such a presumption must be rebutted by clear and convincing evidence.

The one year period for either termination or non-application of the stay begins to run from the date of dismissal of the first case.  In a joint case if only one of the debtors had a prior case dismissed in the year before filing, the automatic stay is affected only as to the debtor with the prior case.  Section 362(c) (3) and (4) apply to the acts of a specific debtor rather than joint debtors in the aggregate.

Under § 362(c)(3) the stay terminates only in connection with a formal Judicial or administrative actions commenced before the bankruptcy filing.  The debtor must file and serve a motion under §362(c)(3)(B) so as to allow the court to enter an order granting the motion within 30 days of the case filing.  Failure to file timely under § 362(c) (3)(B) or (4)(B) may not preclude the debtor from seeking imposition of a non-automatic stay under § 105.  The motion must allege good faith in the new filing and facts sufficient to rebut any presumption of bad faith.  In order to satisfy the clear and convincing evidence standard, each motion requesting an extension of the automatic stay under § 362(c) (3) (B), together with the supporting affidavit should contain certain minimal information such as:

  1. Whether the extension is sought as to all creditors or a single creditor;
  2. The case number as well as the commencement and dismissal dates of the debtor’s case pending within the previous year;
  3. Reason or reasons giving rise to the presumption that the current case was “filed not in good faith”; and
  4. the change in the financial or personal affairs of the debtor subsequent to the dismissal of the previous case or any other reason that will support the debtor’s contention that the present case will be concluded with a discharge if filed under Chapter 7 or, if filed under Chapter 11 or 13, will be concluded with a confirmed plan that will be fully performed.

The motion may include any additional information or evidence that the debtor or party in interest believes is significant.  Any motion to extend the automatic stay filed without containing the minimum requirements and evidentiary proof will be denied.

Inside Serial Filing and Automatic Stay