Lifting the Automatic Stay in Bankruptcy

Many people going through difficult financial times are forced to file bankruptcy. Bankruptcy may not be your only option, but it is the best option when you feel like you are drowning in debt and collection calls. When filing a chapter 7 bankruptcy petition there is an automatic stay which stops most collection efforts. The automatic stay does not allow creditors to collect while your bankruptcy case is going on. It is called an automatic stay because it takes effect as soon as the bankruptcy petition is filed (automatically).  The intent of the automatic stay is to give you a break from harassing creditors, and allow you the opportunity to develop a plan to reorganize your finances.

However, there is a way for the automatic stay to be “lifted” by a creditor. Why would they do that? Many creditors do want to continue collecting from a debtor during the bankruptcy and in that instance the creditor must seek permission directly from the court to do so. When a creditor seeks permission it is known as getting relief from the automatic stay. In order to do this, the creditor must file the appropriate motion with the bankruptcy court.  The debtor is entitled to receive notice and a hearing on the motion the creditor has filed with the court. The creditor must then convince the bankruptcy court that the stay must be lifted.

An instance where the court would not grant relief from the automatic stay is when an unsecured debt would be included in the debtor’s discharge.  A common instance where the court may lift the automatic stay is when a secured creditor seeks to have the automatic stay lifted. Since there is collateral in this instance the collateral must be either paid for or returned. Usually, the Court will lift the stay unless the debtor is able to bring the payments owed current. An example of this is when a mortgage lender asks the court to lift the stay so it may continue with the foreclosure process.
If you feel like you need a break from harassing creditors and collection calls, filing bankruptcy may be the right option for you. If you have any questions please feel free to contact the Law Office of Ray Garcia, P.A. at 305-227-4030 for a free consultation.

Ray Garcia, Esq.

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Law Office of Ray Garcia, P.A.

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