J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

Yes, even bankruptcy lawyers file bankruptcy. Alex Wathen, a Houston bankruptcy attorney for the firm of Bailey & Galyen, filed chapter 13. He had not filed tax returns for several years, and was behind on his chapter 13 plan payments, so the Chapter 13 Trustee William Heitkamp filed a Motion to Dismiss for these and other reasons. Then the trustee made an agreement with Wathen that unless he became current with chapter 13 plan payments within 10 days, the case would be dismissed.

The debtor did not become current, so the case was dismissed. Wathen timely filed a motion to reinstate his chapter 13 case. The Trustee opposed it. The court granted the motion, even though on April 17, 2013, Wathen's employer, Bailey & Galyen announced its intention to close its bankruptcy practice in Houston, Texas and Wathen would apparently be out of a job in the near future.

In a May 10, 2013 opinion, U.S. Bankruptcy Judge Letitia Paul held that reinstating a bankruptcy case that has been dismissed is not directly addressed in the Bankruptcy Code or Rules. The Court said that courts that have reinstated bankruptcy cases, have done so pursuant to Rules 59 and 60 of the Federal Rules of Civil Procedure. Rule 59 provides that a new trial may be granted for any of the reasons for which rehearings have "heretofore been granted in suits in equity in federal court." Rule 60 provides for relief from a judgment for the reasons, among others, mistake, inadvertence, surprise, or excusable neglect.

While our firm sometimes files motions to reinstate, other Houston bankruptcy judges are not as understanding as Judge Paul, and do not usually grant them. Also, sometimes a debtor cannot wait for a case to be reinstated, as they may have a vehicle finance company that will repossess their vehicle in the meanwhile, before a motion to reinstate could be ruled upon by the court. So often it is necessary to file a new chapter 13 case, to invoke the automatic stay, when the debtor's case has been dismissed, but he or she is now able to perform under their plan. But, this is a well-written opinion and a good result for the bankruptcy attorney.

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