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Bankruptcy Court Says Bankruptcy Case Is 'Filed' When Uploaded, Not Stamped
"Mere minutes can be the difference between saving one's home … or losing that home to a foreclosure." With this statement, the U.S. Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) summed up the importance of the determination as to when a bankruptcy case is actually filed of record, thereby triggering the imposition of the automatic stay. In In re Francisco Procel, Case No. 23-10697-CGM (Bankr. S.D.N.Y., July 25, 2023), Docket No. 47, the Bankruptcy Court thoroughly examined this issue and found that the "upload" time of a bankruptcy filing — and not the time physically "stamped" on a bankruptcy petition — determines when a case is commenced. In doing so, the Bankruptcy Court offered direction and guidelines that debtors and creditors will be well advised to observe in future cases.
Facts and Procedural History
In this case, the debtor filed for relief under Chapter 13 of the Bankruptcy Code on May 2 — the same day that a foreclosure sale was scheduled to be held on an investment property the debtor owned. The foreclosure sale was scheduled to commence at 2 p.m., proceeded as planned, and concluded by 2:05 p.m. The debtor's bankruptcy petition, however, bore a "time stamp" of May 2 at 2:25 p.m. — 20 minutes after the foreclosure sale concluded.
On May 26, the loan servicer that conducted the foreclosure sale on the property filed a motion in the debtor's bankruptcy case seeking a declaration that the automatic stay was not in effect when the foreclosure sale occurred. The debtor filed an opposition to the motion and argued that he electronically filed his bankruptcy petition online using the court's electronic pro se bankruptcy petition prior to when the foreclosure sale occurred. Included in the debtor's opposition was a screenshot from his phone that allegedly showed that his bankruptcy petition was uploaded at 1:12 p.m. — 48 minutes prior to the foreclosure sale.
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