Translating Section 362(c)(3) What Gets Terminated

By: Michael C. Aryeh

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

Adopting the majority approach, in In re Williford, the Bankruptcy Court for the Northern District of Texas held that the plain meaning of the phrase “with respect to the debtor,” found in section 362(c)(3)(A) of the Bankruptcy Code, limits the termination of the automatic stay to the debtor and the debtor’s property, and the automatic stay does not terminate the stay with respect to the property of the estate.[1]  In Williford, the debtor and his wife executed a deed of trust to a secured creditor, placing a lean on their real property.[2]  At some point, the debtor defaulted on the note, the secured creditor served the debtor with a notice of acceleration and foreclosure.[3]  In response, the debtor filed for bankruptcy under chapter 7, but the case was subsequently dismissed due the debtor’s failure to file certain information with the bankruptcy court.[4]  Following the dismissal, the creditor again began serving the debtor with foreclosure notices.[5] The debtor then filed for bankruptcy under chapter 11 within a year of the dismissal of his previous chapter 7 case. [6] The debtor, however, failed to file a motion to extend the automatic stay within the 30-day window provided for in section 362(c)(3)(A).[7] Thirty-five days after the debtor filed his second case, the creditor moved to confirm that the automatic stay was “terminated.”[8] The next day the debtor moved to extend the stay.[9]  The court denied the debtor’s motion.[10] The court, however, agreed with the debtor that section 362(c)(3) did not terminate the entire automatic stay and, instead, only terminated the stay with respect to the “debtor’s property.”[11]