The Shorter Stay for a Repeat Filer
An individual who filed before and was dismissed within the preceding year does not get the ordinary stay. One prior case shortens it to thirty days; two or more mean it never takes effect, and in each situation the remedy is a motion with a fixed deadline.
The rule in short
Section 362(c)(3) provides that where an individual debtor had a case pending within the preceding year that was dismissed, the stay terminates on the thirtieth day after the later filing with respect to the debtor. Section 362(c)(4) provides that where two or more such cases were dismissed, no stay goes into effect at all. In each situation a party in interest may move to continue or impose the stay, and must demonstrate that the later filing is in good faith.
Two provisions treat a repeat filing differently from a first one. Both apply only to individual debtors, both look back one year, and both count dismissals rather than filings. The effect of the first is to give a shortened stay; the effect of the second is to give none. In each situation the debtor's remedy is a motion, and the motion has a hard deadline.
One prior case dismissed within the year
Where a single or joint case is filed by or against an individual debtor under chapter 7, 11 or 13, and a single or joint case of that debtor was pending within the preceding year but was dismissed, the stay with respect to any action taken with respect to a debt or property securing that debt, or with respect to any lease, terminates with respect to the debtor on the thirtieth day after the filing of the later case.
The carve-out is narrow. A case refiled under a chapter other than chapter 7 after dismissal under the means-testing provision does not count. Everything else does, including a case dismissed for a procedural failure such as not filing schedules, which is how many debtors find themselves in the provision without having done anything strategic.
Counting is done by case rather than by debtor pair, which matters in joint filings. A joint case of the debtor pending within the year and dismissed counts, and so does a single case; the provision names both. Whether a spouse's separate case counts against a debtor who was not a party to it is a question of whose case it was, and the answer is usually no.
The termination is automatic. No creditor need apply and no order is entered; on the thirtieth day the protection simply ends unless the court has extended it. A creditor watching the docket can calendar the date from the petition.
What exactly terminates
The statute says the stay terminates "with respect to the debtor," and courts have divided sharply over what that phrase excludes. On one reading it means what it says: the stay ends as to the debtor and property of the debtor, while the stay protecting property of the estate continues, because the estate is a distinct legal interest that the phrase does not name.
On the competing reading, the phrase is a shorthand for the stay as a whole, and reading it narrowly leaves the provision with almost no effect in a chapter 13 case where the significant assets are estate property. Decisions on both sides have described the text as poorly drafted, and the division has persisted.
The consequence for a creditor is uncomfortable. In a district following the narrower reading, acting against a vehicle or a residence that remains estate property after the thirtieth day is a violation, with the exposure described in the treatment of acts taken in violation. The cautious course is a comfort order confirming what terminated.
| Prior cases dismissed within the year | Effect on the stay | Remedy and deadline |
|---|---|---|
| None | Ordinary stay under subsection (a) | No motion required |
| One | Terminates with respect to the debtor on the thirtieth day | Motion to continue, hearing completed within thirty days |
| Two or more | No stay goes into effect on filing | Motion to impose, requested within thirty days |
| One, refiled under another chapter after a means-test dismissal | Ordinary stay; the carve-out applies | No motion required |
| Any number, corporate debtor | Ordinary stay; the provisions do not apply | Creditor may seek relief for cause |
Two or more prior cases
The second provision is more severe. Where two or more single or joint cases of an individual debtor were pending within the previous year but were dismissed, the stay does not go into effect upon the filing of the later case at all, and on request of a party in interest the court shall promptly enter an order confirming that no stay is in effect.
That confirmation order is a useful instrument for creditors, because it removes the risk of misjudging the count. It is entered promptly and does not require a hearing on the merits of anything; it records a state of affairs created by the statute.
The debtor's remedy is to ask the court to impose the stay. If a party in interest requests it within thirty days after the filing of the later case, the court may order the stay to take effect as to any or all creditors, subject to conditions, after notice and a hearing, and only on the good-faith showing described below. A stay imposed that way is effective on the date the order is entered, not retroactively.
Under the one-prior-case provision, the hearing on a motion to continue must be completed before the thirty-day period expires, so a hearing on the thirty-first day is too late whatever the merits. Under the two-case provision, the request must be made within thirty days but the order takes effect only when entered, leaving a gap during which no stay exists. Confusing the two costs the protection.
Good faith and the presumptions
Both motions turn on the same question: whether the filing of the later case is in good faith as to the creditors to be stayed. The party in interest seeking the stay carries that burden, and the statute supplies presumptions that make it harder in stated circumstances.
A case is presumptively filed not in good faith as to all creditors where more than one previous case under chapters 7, 11 or 13 was pending within the preceding year; where a previous case was dismissed within that year after the debtor failed to perform stated obligations, including filing or amending the petition or documents without substantial excuse; and in other described situations. The presumption may be rebutted only by clear and convincing evidence to the contrary.
The presumptions are not the whole of the inquiry. Where none applies, the court still decides good faith on the ordinary evidence, and the absence of a presumption is not the same as a finding in the debtor's favor. Where one applies, the elevated standard is a real obstacle, and the motion is usually supported by declarations and documents rather than by argument.
What rebuttal looks like is fact-specific. A material change in circumstances since the earlier dismissal — new employment, a resolved dispute, a realistic plan where the earlier one was not — is the usual substance. Where the motion fails, the debtor is left in a case without the ordinary protection described in the freeze that begins on filing, and creditors need not bring a motion for relief on the statutory grounds before acting against the affected property.
Points to carry away
- The provisions apply to individual debtors in cases under chapters 7, 11 and 13.
- One prior case dismissed within the preceding year cuts the stay to thirty days.
- Two or more dismissed within the preceding year mean no stay arises on the later filing.
- Courts have divided on whether the thirty-day termination reaches property of the estate.
- A motion to continue the stay must be heard and completed before the thirty-day period expires.
- The later filing is presumed not to be in good faith in stated circumstances, rebuttable by clear and convincing evidence.
Questions readers ask
Do these rules apply to a company that filed before?
No. Both provisions are drafted for a case filed by or against a debtor who is an individual, and the second is confined to individuals as well. A corporate debtor that filed and was dismissed within the preceding year gets the ordinary stay on a later filing. That does not leave creditors without a response: bad faith in a repeat corporate filing is regularly asserted as cause for relief from the stay, and in stronger cases as a ground for dismissal of the case itself.
What is the effect of a prior case that was refiled under a different chapter?
Both provisions carve out a case refiled under a chapter other than chapter 7 after dismissal under the means-testing provision. A debtor whose chapter 7 case was dismissed under that provision and who then filed under another chapter is not counted as a repeat filer on that account. The carve-out is narrow and keyed to a specific dismissal ground, so a case dismissed for any other reason counts in the ordinary way.
How quickly does the motion have to be brought?
Very quickly, because the statute requires the hearing to be completed before the period expires rather than merely commenced. In practice the motion is filed with the petition or within the first days of the case, on shortened notice, so that a hearing can be held and an order entered inside thirty days. A motion filed late is not saved by the court's schedule, and the stay will have terminated by the time it is heard.
Sources
- 11 U.S.C. § 362, Cornell LIISubsections (c)(3) and (c)(4) set the thirty-day termination, the no-stay rule and the good-faith presumptions.
- 11 U.S.C. § 707, Cornell LIIThe dismissal provision referenced in the carve-out for a case refiled under another chapter.
- 11 U.S.C. § 349, Cornell LIIStates the effect of dismissal, which is what makes an earlier case count for these purposes.
- 11 U.S.C. § 105, Cornell LIIThe general power invoked where a party seeks relief the specific provisions do not supply.
- Federal Rule of Bankruptcy Procedure 9014, Cornell LIIGoverns the contested matter through which a motion to continue or impose the stay is heard.
- Federal Rule of Bankruptcy Procedure 9006, Cornell LIIGoverns computation of the thirty-day period and the shortening of notice.
Rapid Response Law is a publication, not a law firm. This article states general rules and cites its sources; it is not advice about any particular case, and the law differs by state and changes over time.
More in First-Day Relief
How Quickly a Court Must Hear a Stay Motion
Section 362(e)(1) terminates the stay thirty days after a request for relief from a stay of an act against estate property, as to the requesting party, unless the court after notice and a hearing orders it continued. The hearing may be preliminary or consolidated with the final hearing. Where it is preliminary, the court must order continuation if there is a reasonable likelihood that the party opposing relief will prevail, and the final hearing must conclude within thirty days after it.
The First-Day Hearing and What Is Heard There
First-day hearings are held within days of a business filing, on shortened notice, to authorize what the debtor needs to keep operating. Rule 6003 prohibits granting listed applications within twenty-one days after the petition is filed unless relief is needed to avoid immediate and irreparable harm, and expressly does not apply to motions under Rule 4001. Cash collateral and financing are therefore heard first, with final hearings following after full notice.
The Freeze That Begins the Moment a Petition Is Filed
Section 362(a) provides that the filing of a petition operates as a stay, applicable to all entities, of eight described categories of act. It takes effect on filing, requires no order, and binds parties who have no knowledge of the case. Its two branches expire on different terms: the stay of acts against estate property continues while the property remains estate property, and the stay of other acts continues until the case closes, is dismissed, or a discharge is granted or denied.