A New Jersey township filed to foreclose on Debtors’ home since they failed to pay about $4,500 in sewer, trash, and hydrant fees to the township. Debtors filed Chapter 13 in order to stop the sale of their home. The township filed several motions to continue the sheriff’s sale of their home while the bankruptcy case progressed. The township never filed a motion with the Bankruptcy Court to request that the automatic stay be lifted. The Debtors filed brought an action against the law firm which represented the township, alleging that these motions to continue the sale of their home violated the automatic stay of the Bankruptcy Code.
The township filed a Proof of Claim in the Chapter 13 case for $9,500. The Court confirmed the Debtors’ Chapter 13 plan, which provided for this claim.
The Defendant law firm filed a motion to dismiss the Debtors’ complaint, relying on a prior 3rd Circuit case from 1999 (In re Taylor) The Bankruptcy Court granted the motion and dismissed the complaint. The Debtors appealed to the District Court, which upheld the prior decision. The Debtors then appealed to the 3rd Circuit.