What Is a Motion for Relief From Stay?Serving Families Throughout Mobile
| By Kevin Ryan
The automatic stay is a powerful legal protection that goes into effect immediately upon the filing of a bankruptcy case. It prohibits most creditors from taking any further collection actions against the debtor or the debtor's property. The stay is designed to give the debtor a breathing space and protect the bankruptcy estate while the bankruptcy case is pending.
However, there are situations where a creditor may have a valid reason to request relief from the automatic stay. Common reasons for filing a Motion for Relief from Stay include:
Secured Debts: If the debtor is behind on mortgage or car loan payments, the creditor may seek relief from the stay to continue foreclosure or repossession proceedings.
Lack of Adequate Protection: If the value of collateral securing a debt is decreasing, a creditor may argue that it is not adequately protected and request relief to take action to preserve its interests.
No Equity: If the debtor has no equity in the property and there is no benefit to the bankruptcy estate, a creditor may seek relief to pursue its claim outside of bankruptcy.
Bad Faith: If the debtor filed for bankruptcy in bad faith or to hinder, delay, or defraud creditors, a creditor may request relief to pursue its claims.
For Cause: Other specific circumstances that warrant relief from the stay, as determined by the bankruptcy court.
The bankruptcy court will consider the creditor's motion and the debtor's response before making a decision. If the court grants the motion for relief from stay, it allows the creditor to resume collection or foreclosure actions against the debtor or the debtor's property. However, the debtor's bankruptcy case still continues, and other debts may be discharged or restructured through the bankruptcy process.
It's crucial for debtors facing a Motion for Relief from Stay to consult with an attorney experienced in bankruptcy law to understand their rights, options, and potential consequences of the court's decision.