When the Stay Terminates, it Ceases to Protect the Repeat-filing Debtor and all of that Debtor’s Property, including Property of the Estate

When the Stay Terminates, it Ceases to Protect the Repeat-filing Debtor and all of that Debtor’s Property, including Property of the Estate

This contested matter requires the Court to interpret 11 U.S.C. § 362(c)(3)(A). Section 362(c)(3)(A) plainly effects a termination of the automatic stay on the thirtieth day after the petition date in a chapter 7, 11, or 13 case if the debtor had a prior case dismissed within the previous year. However, the extent of termination under section 362(c)(3)(A) is not plain, and courts have struggled to find an interpretation that adheres to the statute’s text and promotes its apparent purpose. One interpretation does not fulfill the statute’s purpose in any meaningful sense, and others arguably run afoul of rules of statutory construction. No interpretation is entirely satisfactory.

In December 2014, the Debtor filed a petition under chapter 13. In November 2016, the Debtor’s case was dismissed because of his failure to make the payments required by a confirmed chapter 13 plan. On December 28, 2016, the Debtor commenced this chapter 13 case. No party in interest moved for an order extending the stay under section 362(c)(3)(B). As a result, the stay terminated under section 362(c)(3)(A) on January 27, 2017.

The State Department of Revenue Services (“Revenue”)  timely filed a proof of claim in this case. At a hearing on February 16, 2017, Revenue moved for an order under 11 U.S.C. § 362(j) clarifying the extent to which the stay had terminated. Mr. Smith opposed Revenue’s proposed construction of section 362(c)(3)(A), and the parties submitted briefs outlining their respective positions. In March 2017, Mr. Smith’s chapter 13 plan  was confirmed by an order providing that all estate property would remain estate property notwithstanding 11 U.S.C. § 1327(b). The confirmation order also reserved the question of the extent to which the stay had terminated pursuant to section 362(c)(3)(A). After a continued hearing on Revenue’s motion in April 2017, the Court took the matter under advisement.

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