Otherwise, the debtor must obtain an order from the bankruptcy court specifically staying any actions until the case is reinstated. 10Ī debtor who is not appealing 11 the dismissal of his case but desires to protect his assets while waiting for reinstatement of his case must obtain reinstatement of the case on an emergency basis, before the creditor takes action. Neither a motion under Federal Rule of Civil Procedure 59(e) nor under Federal Rule of Civil Procedure 60(b) stays any action a creditor may take after dismissal of the case. WHAT EFFECT DOES A MOTION TO RECONSIDER THE DISMISSAL OF THE CASE HAVE ON ANY STAY?Ī motion to reconsider the dismissal of the case does not prolong any stay that may have existed while the case was pending. 7 Actions taken after reinstatement of the bankruptcy case and the concurrent reimposition of the automatic stay are, of course, violative of the automatic stay once it is reimposed. WHAT ACTIONS MAY CREDITORS TAKE AFTER A CASE IS DISMISSED?Ĭourts 4 have also been uniform in finding a creditor may pursue its legal and contractual rights against a debtor whose case has been dismissed, unless the court enters a specific order staying any action against the debtor or the debtor’s property.Īfter dismissal of a case, creditors have proceeded with foreclosure actions, 5 repossession of a car 6 and eviction. § 362(a) nor the stay of Rule 7062 3 applies after dismissal of a bankruptcy case. Procedure applicable in contested matters, 1 specifically does not apply Rule 7062 in contested matters, unless the court orders otherwise.Īs a result, courts have been consistent in finding neither the automatic stay 2 of 11 U.S.C. He is the author of the two-volume “Bankruptcy Handbook” published by Knowles Publishing and specializes in representing creditors in bankruptcy cases in South Carolina. Bratton Davis, a standing Chapter 13 trustee for 15 years and an adjunct professor of bankruptcy law at the University of South Carolina School of Law. That seems straightforward enough, but does it apply to bankruptcy dismissals? Federal Rule of Bankruptcy Procedure 9014(c), which makes certain rules of civilīy John B. Therefore, Rule 62(a) automatically applies a 14-day stay to the execution or enforcement of certain judgments in adversary proceedings. “applies in adversary proceedings,” and Rule 62(a) says, “Except as stated in this rule, no execution may issue on a judgment, nor may proceedings be taken to enforce it, until 14 days have passed after its entry.” Some attorneys mistakenly believe a temporary stay of the dismissal order arises under Federal Rule of Bankruptcy Procedure 7062 and Federal Rule of Civil Procedure 62(a). (C) if the case is a case under chapter 7 of this title concerning an individual or a case under chapter 9, 11, 12, or 13 of this title, the time a discharge is granted or denied (2) the stay of any other act under subsection (a) of this section continues until the earliest of: § 362(a) terminates, pursuant to 11 U.S.C. Once the case is dismissed, the automatic stay of 11 U.S.C. The short answer to this question is that no stay applies. If your client is a secured creditor and the debtor’s bankruptcy case has been dismissed, can the debtor’s car be repossessed and sold? Can foreclosure resume on the debtor’s real estate? If your client is a landlord with the debtor as a tenant, can the debtor be evicted once the case is dismissed? Is there a period of time the creditor has to wait before taking any action against the debtor? What impact does the debtor’s motion to reconsider and vacate the order of dismissal have on the rights of creditors to act against the debtor or his property?Ī short examination of these issues will dispel some of the misconceptions practitioners may have about what happens when a WHAT STAY APPLIES AFTER A BANKRUPTCY CASE IS DISMISSED? Many questions may arise when cases are dismissed. You need to know what else to do to protect the debtor’s assets. Say your client’s Chapter 11 case was dismissed for failure to timely file a plan, and you are filing a motion to vacate the order of dismissal. The rules regarding what happens after the case is dismissed and how to obtain a stay are convoluted, however, creating traps for unwary practitioners.įor example, if your client’s Chapter 13 case was dismissed for non-payment and your client wants his case reinstated, you should know what to tell him may happen in the meantime. If your client’s bankruptcy case gets dismissed, either for failure to abide by a Chapter 13 plan or follow through with other obligations, creditors are positioned to go after the debtor’s assets, unless a stay is ordered or reinstated. Review the documents to ensure they meet the filing requirementsĢ.How the dismissal of a bankruptcy case impacts creditors’ actions
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