By Ryan C. Wood
One of the most common motions in all Chapters of the Bankruptcy Code is the filing of a motion for relief from stay. If you filed bankruptcy and have a vehicle loan or home mortgage the company with the loan might have grounds to seek relief from the stay. The stay is the single most important part of filing for bankruptcy protection. Section 362 of the Bankruptcy Code provides the ins and outs of the stay. Seeking relief from stay is usually requested pursuant to Section 362(d). The automatic stay takes effect as soon as the initial bankruptcy petition is filed. The stay stops any and all collection activity by the people you owe money to. A motion for relief from stay is a company or person you owed money to asking the Bankruptcy Court to allow them to continue their collection efforts like repossession of a car or foreclosure of a home. So when can relief from stay be granted?
Generally cause exists for a creditor to ask for relief from stay when they are not adequately protected. That is the loan is not adequately protected. Cause cannot really be clearly defined under every circumstance. The judge assigned to your case gets to make that determination and of course there is case law to help define what cause is. If you are behind on your car payments and do not want to keep the car when filing for bankruptcy the loan company will ask the court for relief from stay to repossess the vehicle and auction it off to pay off the loan. The same is true of a home. If you are behind on your mortgage payments and do not want to keep the house when filing for bankruptcy; your mortgage company will usually request relief from stay to start or continue the foreclosure process. So what if you want to keep the car or the house and the loan company has filed a motion for relief from stay?
It is time for your bankruptcy lawyer to step into action. If you are behind on your mortgage payments and your mortgage company has filed for relief from stay you can hopefully work out an adequate protection order. An APO (adequate protection order) provide a remedy for the mortgage company to basically get paid the money you are behind and the Bankruptcy Court will give the mortgage company relief from the stay. Usually the APO will have terms in it that if you miss a payment agreed to in the APO the mortgage company will give your bankruptcy attorney notice of the missed payment. Generally most APO’s have language in them that if the APO is not followed the mortgage company can then obtain relief from the stay. Most APO’s are for six months. The missed mortgage payments will be divided into six equal payments. Once all the payments are made life goes on. There are many different reasons creditors seek relief from the stay, not just to repossess a vehicle or foreclose on a home.