Can I File a Motion to Impose a Stay After Reopening Chapter 7 in CA?

Question from JT, Can I File a Motion to Impose a Stay After Reopening Chapter 7 in CA?

Answer from AI:

Can You File a Motion to Impose a Stay after Reopening a Chapter 7?

Yes. In California, once you have successfully reopened a closed Chapter 7 case, you may also ask the court to reinstate the automatic stay while your motion to avoid a lien on real property is pending. The stay is not automatic upon reopening; you must request it, either in the same filing that reopens the case or in a separate motion.

Key Statutes and Rules

• 11 U.S.C. § 362(a) – establishes the automatic stay that goes into effect when a bankruptcy case is filed and terminates when the case is closed or dismissed.
• 11 U.S.C. § 506(d) and § 1322(b)(2) – provide the legal basis for avoiding a lien that is wholly unsecured or that was not properly perfected.
• Local Rule 7002 (Central District of California) – requires a motion to reopen a case to be accompanied by a declaration, fee waiver request (if applicable), and a proposed order. The same rule permits attaching a request for stay reinstatement to that motion.

For the full text of the statutes, see the U.S. Code at Cornell Law School’s site: 11 U.S.C. § 362.

Typical Procedure

1. File a Motion to Reopen the Chapter 7 Case

   • Prepare a motion to reopen that explains why the case should be reopened (e.g., to file a motion to avoid a lien).
   • Attach a declaration stating the facts and, if you qualify, a request for a fee waiver.
   • Include a proposed order that both reopens the case and reinstates the automatic stay. Courts often grant the stay automatically when they grant the reopening, but explicitly requesting it avoids any ambiguity.

2. Serve All Interested Parties

   • Serve the motion on the bankruptcy trustee, the lienholder, and any other creditors who have filed a proof of claim. Service must be completed at least 14 days before the hearing (or as required by the local rule).

3. File the Motion to Avoid the Lien

   • After the case is reopened (or simultaneously), file a motion to avoid the lien under § 506(d) or § 1322(b)(2).
   • Include supporting documents such as the deed, the lien instrument, and evidence that the lien is wholly unsecured.

4. Request a Separate Motion for Stay (if not included in the reopening motion)

   • If you chose not to combine the stay request with the reopening motion, file a motion for stay reinstatement.
   • Cite § 362(a) and explain why a stay is necessary while the lien‑avoidance issue is resolved (e.g., to prevent foreclosure or other creditor actions).
   • Attach an affidavit showing that the case was closed and that the stay terminated.

5. Attend the Hearing

   • The court will schedule a hearing on the motions. Be prepared to argue:
     • The legal basis for avoiding the lien.
     • Why the stay is needed to protect the property during litigation.
   • Creditors may object, especially if they claim the lien is valid or that the stay would cause undue hardship.

6. Court Order

   • If the judge grants the motion, the order will reopen the case and impose a stay effective immediately. The stay remains in place until the court lifts it—typically after ruling on the lien‑avoidance motion or upon a creditor’s successful motion for relief from the stay.

Practical Tips

• Combine Requests When Possible – Including the stay request in the reopening motion streamlines the process and reduces the chance of a procedural dismissal.
• Follow Local Rules – Each bankruptcy district may have specific formatting or filing requirements; check the local rules for the district where your case is pending.
• Document Everything – Keep copies of all filings, service proofs, and court orders. They are essential if a creditor later challenges the stay.

When to Seek Professional Help

Bankruptcy law is highly technical, and the success of a lien‑avoidance and stay request often hinges on precise statutory arguments and timing. While the steps above outline the general process, a licensed bankruptcy attorney can tailor the filings to your specific situation, address any creditor objections, and ensure compliance with local court rules.

For additional guidance, the U.S. Courts’ bankruptcy page provides forms and procedural checklists: Bankruptcy Basics – U.S. Courts.