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10. Limit on Automatic Stay
The new law limits the application of the
stay or provides that it does not go into effect, in certain
circumstances, where there are serial filings under circumstances
that would indicate bad faith or abusive filings. The stay terminates
after 30 days if there is a filing by an individual in Chapter
7, 11 or 13 (but not Chapter 12) within 1 year after the prior
case (under any Chapter) was dismissed (except for a case refiled
in another chapter after a dismissal of a Chapter 7 case based
on the means test). A party in interest (including the debtor)
may move to extend the stay and show that the filing is in good
faith. A case is presumed to be in bad faith for this purpose
if more than one case was pending in Chapters 7, 11 or 13 (again,
not in Chapter 12) and at least one such case was dismissed
for failure to file required documents without substantial excuse,
to provide adequate protection, or to complete a plan, and there
is no showing that the debtor’s financial situation has
changed so as to allow a final discharge or completion of a
plan. If two or more cases under any Chapter were dismissed
during the prior year, the automatic stay does not go into effect
at all until the court so orders after a hearing and a demonstration
that the filing was made in good faith. The same bad faith factors
noted above are also applicable to this determination. The law
also provides that the stay will terminate if the debtor does
not timely file (i.e., within 30 days after the petition date)
its statement of intent with respect to property subject to
a security interest and timely (i.e. within 30 days after the
first date set for the §341 meeting) complies with the
stated intention. The court may extend the stay upon the motion
of the trustee if the property is of the value to the estate
and adequate protection is afforded to the creditor.
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