One of the many benefits of filing a bankruptcy action is that it automatically stays any parties from pursuing civil claims against the debtor. Generally, a stay will last for the duration of the bankruptcy case. In some instances, though, the stay will expire after a much shorter time period. In such instances, the debtor may petition the court to extend the stay. Recently, a California court explained the grounds for granting a request to extend a stay in a matter in which a creditor objected to the bankruptcy court’s decision. If you are unable to manage your debts, you may be eligible to file for bankruptcy, and you should speak to a California bankruptcy lawyer regarding your rights.
The Background of the Case
It is reported that the debtor filed a Chapter 11 bankruptcy petition in May 2019. Two months later, the court dismissed his case on the grounds that the debtor’s attorney did not sufficiently represent or counsel him. The debtor filed a second Chapter 11 bankruptcy petition in January 2020. In the second case, he was not represented by an attorney. The debtor subsequently filed a motion to extend the automatic stay; while the stay granted in a bankruptcy case usually endures for the duration of the case, if a debtor had a pending Chapter 11 case dismissed within the preceding year, the stay only lasts 30 days.
Allegedly, the debtor also filed a declaration stating the served notice of the motion on all known creditors. The court granted the motion, extending the stay until terminated by operation of law or an order of the court. The creditor then learned of the bankruptcy proceeding and filed a claim against the debtor in civil court. The bankruptcy court dismissed the debtor’s case, pursuant to a motion by the trustee, and the state court dismissed the creditor’s case. The creditor moved to reopen the bankruptcy case for the limited matter of determining whether the stay was terminated as to them. The court granted the motion but found that the stay applied to the creditor. The creditor then appealed.