However, under certain conditions, a creditor may petition the court to lift the automatic halt and allow them to proceed with legal action against you. This is formally known as a motion for relief from the automatic stay, which essentially means that the creditor is requesting permission from the court. Consider it as the classic game of ""Mother, May I?"" applied to a legal proceeding.
Once granted, the creditor can continue where they left off prior to your bankruptcy filing. Therefore, if the foreclosure sale was previously scheduled, it will be rescheduled. If the repossession agent was in the driveway, he will return with the tow vehicle.
There are not that many defenses to a motion for relief from the automatic stay in a Chapter 7 bankruptcy. The reason for this is comparatively straightforward: in Chapter 7, you do not use the stay to catch up on past-due payments. Chapter 7 is for debt discharge, not financial reorganization. Therefore, it is assumed that there is no motivation to continue making payments on the secured debt.
Nonetheless, it is essential to acknowledge that there are several methods to defend a motion for relief. You must be able to guarantee:
Creditor is the appropriate party of interest. In other words, that the creditor requesting relief is actually entitled to it. It must be the genuine lender or loan servicer. They have no claim to relief if they do not own the loan or have a contractual relationship with the loan's owner.
The creditor has complied with all local and federal rules regarding the presentation of evidence. Coming before the court and stating, """"Give us relief because we said so"""" is insufficient.
The creditor has served all required parties in the appropriate manner. A motion will always be denied if it is filed in court without appropriate notice.
Even after respite from the automatic stay is granted, it's important to remember that this isn't the end of the road; it simply transfers the case back to your state or local court. When the stay is lifted, the creditor must still observe state law regarding repossession or foreclosure, so it is important to consult with your attorney about your options.
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