What Should I Do if I Receive a Motion for Relief From the Automatic Stay?

When you file a bankruptcy case, the automatic stay immediately goes into effect and protects you from collection efforts by creditors. The stay protects you the entire time your Chapter 7 or Chapter 13 is pending, unless a creditor files a motion seeking permission from the court to take certain collection efforts against you.

A “Motion for Relief from the Automatic Stay” (Motion) is typically filed by a secured lender that is seeking permission to foreclose upon or seize collateral. The most common examples of creditors that file this type of motion are your mortgage lender and your car loan lender. If you are delinquent on your mortgage loan and your lender has started the foreclosure process, the lender may file a Motion seeking to continue the foreclosure of your home.

It is important to understand that even if the court grants the creditor’s Motion for relief from the automatic stay, the creditor will not be allowed to collect any deficiency balance from you. In other words, the lender can foreclose on the collateral, but the amount that remains due and owing after the asset has been sold will be discharged in your bankruptcy filing.

If you have been served with a Motion, it is important to confer with your bankruptcy attorney immediately. A debtor has the opportunity to file an objection to the Motion, but it may not be necessary to do so. For instance, if you are underwater on your mortgage loan and you wanted to surrender your home back to the lender, there is no reason to challenge the Motion.

If you object to the Motion, the court will hold a hearing to hear arguments by both parties and render a decision. If you do not object to the Motion, the court will grant it and enter an order that lifts the stay from applying to that specific debt.

To learn more about motions filed in your bankruptcy case or how we can help you with your Chapter 7 or Chapter 13 case, contact us today.

If you are considering filing a bankruptcy and you need help determining which type of filing would be best for you, contact Fitzgerald Campbell to schedule an appointment. We do not offer just one debt relief option, we don’t push you in one direction. If bankruptcy right for you, we will tell you. If it’s not, we will tell you that. If bankruptcy is your get out of debt plan, it needs to be done right. It needs to be in the hands of experienced lawyers who have been there before. Contact us today!

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