November 20, 2019

My Chapter 13 Was Dismissed Two Weeks Ago – Can I Refile a Chapter 13?

A visitor to one of my web sites wrote me to ask about refiling his Chapter 13.  After being in a Chapter 13 for almost 2 years, this gentlemen lost his job and fell behind with his Chapter 13 payments.  His mortgage company filed a Motion for Relief because he had falled behind on his mortgage payments (this motion was granted) and the trustee filed a motion to dismiss based on the delinquency in trustee payments.  This motion to dismiss was also granted and the case was dismissed.

Now, some 6 weeks later, the mortgage company has started foreclosure proceedings and my visitor wants to know if he can refile the Chapter 13 to stop the foreclosure.

Here are my thoughts:  under the BAPCPA changes to the bankruptcy law, a debtor can refile his Chapter 13 case.  However, if case #2 is filed within 12 months that case #1 was pending, then the automatic stay is not absolute.  Instead, the automatic stay does go into effect, but it terminates in 30 days unless the debtor files a motion with the court and convinces the judge to extend the stay.

Thus, my site visitor can refile his case, but he and his lawyer need to immediately file a Motion to Extend the Stay.  Some judges will extend the stay for pretty much any reason, while others will want to see a significant change in the debtor’s circumstances.

If the judge does not extend the stay, then it would come to an end in 30 days and the mortgage company would be free to re-start foreclosure proceedings.

Note that there are different rules for a 3rd case filed within any 12 months when prior cases were pending, or if the debtor had voluntarily dismissed his prior case – subjects for a different blog post.  In the meantime, my colleague Rachel Lynn Foley does tackle some of these issues in a helpful post published on the Bankruptcy Law Network blog.

Chapter 13 Dismissed – Will I Lose My Car?

I received an order saying my chapter 13 Bankruptcy case was being dismissed because it has been over 5 years plus no payments have been made in 6 mos. I lost my job of 7 years around may, 2007. About 1 year prior I had surgery on my knees and couldnt work for about 5 weeks per knee surgery. I did get behind in my payments during this period, but i did not realize that they would dismiss my case because it was over 5 years.

I paid faithfully until these events happenend in my life. I’M a single mother of 2 children and barely make end meat……My question is, now that my bankruptcy has been dismissed I want to know can they come take my car(which i still owe, not sure how much)or will theycontact me and give me the oppurtunity to make arrangements to pay it off? That was the only secured debtor I had on my bankruptcy. Please give me your advise, I cant afford another attorney.

–Melanie

Jonathan Ginsberg responds:  Melanie, you may have yourself a big problem.  When a Chapter 13 case is dismissed prior to discharge, the protection of the automatic stay disappears and your creditors can pursue all available state remedies available to them.  In a Chapter 13, the plan often changes the monthly payment to secured creditors like a car lender.  So, for example, if your car payment was $450 per month pre-bankruptcy, and your Chapter 13 trustee paid the lender $300 per month, there is a $150 per month delinquency that is building.  If your case goes through to discharge, no problem.  But when your case is dismissed the lender will recalculate what you owe based on the contract rate.  This may put you hundreds or thousands of dollars behind.

I would suggest that you get on the phone and try to negotiate a payment plan with the lender.  If they won’t cooperate you may need to seek Chapter 13 protection again.  There are many capable bankruptcy lawyers in the Atlanta area who will file your case for the filing fee only – with no up front payment.  Another option – file a Chapter 7 and redeem the property using financing offered by a lender who provides Section 522 funding.

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