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How does an Automatic Stay in a Bankruptcy Proceeding affect the time limitations for filing a motion for attorney fees?

Gilroy, CA |

I won a case against the debtor on a promissory note in the amount of 67,000 in May 2007. Debtor filed Bankruptcy in July 2007. Due to fraudulent statements in his App. Court denied debtor a discharge and the case was dismissed. Proceedings concluded in July 2009.

I incurred 22,000 in atty fees to be represented in the bankruptcy proceedings. I motioned the court in October 2009 for Atty fees from the debtor and prevailed. Some of the fees incurred were more than 2 years from the date I filed but I could not file earlier due to the automatic stay.

Debtor has now filed a motion under CCP 473d to have the October motion vacated. He argues I did not file my motion within the 2 year time frame and that the order made in July 2009 is void.

My question is since there was an automatic stay until the bankruptcy proceedings concluded, I was told that that time does not count against my time to file. That the clock stops once the bankruptcy proceedings start and does not start again until the day the bankruptcy was dismissed. Can you advise what the law is on this and what section and code this falls under? Thank you for your assistance.

Attorney Answers 4

  1. You motioned which court in October 2009? Bankruptcy or Superior? And you say some of the fees incurred "were more than 2 years from the date I filed." From the date you filed what? What motion did you not file within the 2 year time frame?

    There seems to be critical facts missing here.

    Mark J. Markus, Attorney at Law
    Handling exclusively bankruptcy law cases in California since 1991.
    Follow Me on Twitter: @bklawr

  2. First, I cannot give you any advice with regards to the state law issues. However, with regards to bankruptcy, the automatic stay can be lifted at any time upon application (motion for relief from automatic stay) for certain specific reasons. In this case, to liquidate (reduce to judgment or apply for attorney's fees) any claim or potential claim. The relief from the automatic stay typically granted by the court will permit the state court action to proceed and liquidate damages but deny any and all collection activities during the period of time the bankruptcy is pending and, if a discharge is received, after the bankruptcy as well.

    You may have a tough time convincing a state judge you did everything you could to protect the attorney fee motion if you did not at least ask for relief from automatic stay during the time the bankruptcy was pending.

    Whether the statute of limitations was or was not tolled while the bankruptcy was pending will ultimately be a decision for the two judges and the state court judge may have a different opinion than the bankruptcy court judge in this matter. Choose your forum wisely.

    This forum is for informational and educational purposes only and represents the opinions of the author. Each debtor and situation is different and you should consult experienced local counsel about IF you should file bankruptcy and, if so, what local counsel advise you should do in the bankruptcy courts.

  3. This is a far too complex issue. You will need the assistance of an attorney.

    ATTORNEY DISCLAIMER TO THE ABOVE ANSWER: The information that I have provided to you is for general information purposes only and shall not be construed as legal advice for your individual circumstance. This information is not intended to create an attorney-client relationship and you should consult with an attorney in your State directly so that the attorney has the full facts, documents, and an account from other witnesses that help support your contentions. If you like my comment, please click on the thumbs-up link below.

  4. This still isn't clear to me, probably because I'm not familiar with the requirements underlying the state court motion you are asking advice on. It sounds more like you need the counsel of a state law attorney rather than bankruptcy. But without seeing the Motion the debtor filed in your state court case, I can't really say. What is this mysterious "2 year time frame"? Is that a state law statute? Is he claiming you violated the automatic stay by whatever it is you did within the bankruptcy case? If so, the proper forum for that is the bankruptcy court. What was the $22,000 in attorneys fees for exactly? What was done to "represent you in the bankruptcy proceedings"? Did you file a complaint against him?

    Was the debtor's entire discharge denied under 11 USC 727, or just the debt he owes to you under 11 USC 523? If the former, how can he maintain that you are not entitled to seek attorneys fees if allowed under the promissory note?

    No matter how you slice it, as the other post points out, this is way more complicated than your facts provide.

    Mark J. Markus, Attorney at Law
    Handling exclusively bankruptcy law cases in California since 1991.
    Follow Me on Twitter: @bklawr

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