By Ryan C. Wood
We have a problem Houston. The motion for relief from the automatic stay practice in the Northern District of California Bankruptcy Court is off the rails. It has been off the rails for quite some time. The following are the issues from a debtors’ attorney perspective that are hopefully objective enough for creditors and the Courts to agree. The final straw that broke the camel’s back was when in the San Jose Division of the United States Bankruptcy Court given the basic no-look fee for an entire Chapter 13 case for 3 to 5 years is $3,300 for a debtors’ attorney. So I get $3,300 for a basic chapter 13 case. I had a creditors attorney request $10,000 in attorneys’ fees and expenses for filing a routine motion for relief from stay. I had to spend my time and money, and it really is MY personal time and money, to appear at the hearing and request the attorneys’ fees and expenses be reduced to some sort of reasonable amount.
Here we go:
1. Eliminate the 14-Day Local Rule For The Initial Hearing
I have not a clue why this even exists. I have not had a single motion for relief from stay filed in any case that time was of such an essence the hearing had to be heard on 14 days or less. Also, we have procedures pursuant to the Local Rules already to get Court permission to have a matter heard on shortened notice. These procedures work great by allowing the Court to determine if the matter really needs to be heard so quickly. There will be situations that require a hearing on shortened notice to obtain relief from stay. WE JUST CANNOT CONTINUE TO HAVE ALL HEARINGS ON 14-DAYS NOTICE WITHOUT ANY JUSTIFICATION. It is not working out so good for us bankruptcy attorneys.
The 14-day notice is a problem because the creditors filing the motions for relief from stay do not timely respond, if at all, to inquiries from me during the 14 days before the hearing. So what is the point? A house is not going anywhere. Most cars are not going anywhere either. Yes, cars are mobile and if the creditor is not getting paid each month they may be concerned about the vehicle going bye bye forever. I can tell you that this is not a concern in reality. No one, at least in none of the more than 3,000 cases I have touched, are people conspiring to stop paying their vehicle loan then somehow conceal the collateral (the vehicle) from the creditor so the can keep the vehicle without paying for it. This is not an absolute, but probably is true 99.99% of the time. The vehicles/collateral are regularly repossessed.
I send email after email and leave messages that continually get ignored by creditor attorneys. It is very frustrating, time consuming and a completer waste of MY time and money. And it is MY time and money. So we apparently need to lower the bar and communicate less? The issue I think is the bankruptcy attorney wants to spend as little time as possible regarding the motion for relief from stay, unless there are issues to resolve other than there are missed payments, while the creditor’s attorney wants there to be a hearing so they can earn more money…………
Then at the hearing it is just a preliminary hearing so why did this have to happen so fast? Why did I have to spend $30 plus appearing telephonically for the creditors’ attorney just to say can we take it off calendar to work out an adequate protection order? Or the hearing is just continued to a later date. Well, that later date is the date the hearing should have been already for things to work out efficiently. I am going to start filing Orders to Show Cause for Sanctions For the Failure to Properly Communicate.
If I do not appear at this 14 day noticed hearing given I have an agreement with the creditors attorney to continue the hearing, the creditors attorney could breach their ethical duty and request the Court enter the order for relief. That has now happened twice even though the creditors attorney agreed to continue the hearing via email with me, the bankruptcy attorney!!! So I can now never trust a creditors attorney to honor our agreement to continue a hearing when my clients home is involved.
2. Treat Motions For Relief From Stay Like Motions For The Willful Violation Of The Automatic Stay
Motions for relief from stay should be treated like motions for the willful violation of the automatic stay. Yeah I said it. What do I mean? What is good for the goose is supposed to be good for the gander. I have filed a number of motions for the willful violation of the automatic stay and unfortunately I am asked by judges if I called the creditor to inform them of the violation? No, there is no requirement for me to meet and confer with the creditor violating the stay. Basically I am being told by the Court that you are not going to get your attorneys’ fees and expenses paid for this violation and I am also not going to award damages for this violation of the stay I believe you should have just call the creditor about……. The filing of minor breached of the automatic stay have all but been eliminated. So now I do not waste my time and money filing motions for the willful violation of the stay unless the violation is egregious. I shoot an email off saying what the violation is and that it needs to stop…… Now some violations of the stay are so egregious that no questions are asked about contacting the creditor first.
I propose creditors should have to meet and confer with debtors and their attorneys before filing a motion for relief from stay regarding any missed payments or alleged missed payments. How about we figure out what is going on here before going before the Court? How about we work out a plan to resolve the delinquency without Court involvement whenever possible? After meeting and conferring if no agreement can be made a motion for relief from stay is filed on 30 days minimum notice for the Court to make a decision. This will allow for more productive hearings that actually do take place, foster more stipulations to be entered into, create space on the Court’s calendar and reduce the cost of resolving the motions for relief from stay for debtors and creditors. Beautiful.