We have discussed the fact that the filing of a bankruptcy petition with the bankruptcy court is an order for relief. And that order for relief triggers the automatic stay provisions of section 362 of the Bankruptcy Court. This automatic stay is a court order that bars creditors from doing most anything to collect on a pre-petition debt with debtor. Of course, that is the general rule, there are exceptions to this rule like the enforcement of child support or alimony for example.
Yes, creditors can ask the bankruptcy court to terminate the automatic stay. The request to terminate the automatic stay is governed by Section 362(d) of the Bankruptcy Code. Generally speaking, creditors cannot just ask to terminate the stay and chase debtor’s assets again or all creditors would do so. No, there are limitations on the ability of creditors to terminate the automatic stay.
For example, a creditor may seek to terminate the automatic stay where debtor has abandoned the home and mortgage company seeks to protect their collateral from losing value if the property is not preserved as soon as possible. Same thing holds true for a vehicle debtor is significantly behind on. Notice, that the creditor must go through the process of motioning the court and serving debtor with a motion for relief from stay. This gives debtor and opportunity to contest the creditors request for relief from the stay. I would say the vast majority of motions for relief from stay are granted by the court.
In most cases, debtor has no reason to contest the motion. However, contesting the motion is sometimes necessary especially if mortgage companies records are faulty, which they can be sometimes. I have had debtor’s current on their payments and mortgage company says they are not. It’s not a perfect world and debtor’s counsel must be vigilant to protect debtor’s rights.
CONCLUSION
When the time is right, or when you are ready, reach out to Minnesota’s nicest bankruptcy law firm at www.kainscott.com. You will be glad you did!
