The motion for relief from stay in bankruptcy – it even sounds scary. And it can be.
When you file for bankruptcy, you are protected by the “automatic stay”. This prohibits creditors from taking any action to collect debts or from taking property which may be secured by the creditor’s loan.
A motion for relief from stay (MFRS) is the creditor’s request to the court to get permission to continue its collection of the debt.
This is most often done when you are behind in mortgage payments and most likely surrendering your home. It can also be used by a car lender when you are behind on the car loan payments.
Most motions for relief from stay are done by negative notice. This means if no one objects to the motion, the court grants the lender’s request after about 21 days.
Once the order is entered by your judge, then the creditor can proceed with securing the property or car.
In most cases, if you are surrendering the home or car, this means the creditor can only continue its process as to the property. Since you are trying to discharge the debt, the creditor can not make collection attempts against you personally.
In the case of a surrendered car, the creditor will most likely pick up the car rather quickly. In the case of a home, the lender will now continue with the foreclosure process.
Remember, you are still the owner of the home up to the moment that the house is sold at public auction. Just because the lender won the motion for relief from stay, does not mean that you have to immediately leave your home. A foreclosure defense may be appropriate, depending on your circumstances.
One of the most important issues with a motion for relief from stay is that the creditor’s attorney is now entitled to fees for bringing the motion in bankruptcy court. It is my opinion, that motions for relief from stay related to homes are merely a way to attach more fees to the account that most likely will not be paid since you are discharging your debts. If the lender had just waited a few more weeks, or months, the discharge will likely have been entered and no motion for relief from stay is required at that point. This is different in the case of cars, since these depreciate quicker and are more likely to suffer some sort of accident, theft, or being hard to locate.
Most important, since lender’s attorneys are looking for ways to make more money at your expense, is to make sure you are completely honest and accurate as to what loans are current and which loans are not the moment before filing.
Some clients have not been truthful as to the current status of their loans. While they think it means they will lose the property, they are wrong. All it did was tack unnecessary costs on to a loan that they wanted to keep – and now have to pay these fees.
With accurate knowledge, I will be able to better handle your situation to delay filing, or even suggest a different bankruptcy approach.
Always keep me informed of everything that could affect your bankruptcy case.
Call 407-749-0080 now for a free consultation.