Regardless of whether you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy , the automatic stay immediately goes into effect when the bankruptcy is filed. The automatic stay is a court order that can stop a foreclosure on a house or a repossession of a vehicle and prohibits creditors from contacting you to collect a debt.
A creditor cannot proceed with a foreclosure or repossession unless the automatic stay is lifted; this is done by filing a Motion for Relief from Stay with the court. When a creditor files a Motion for Relief from Stay they are asking the court for permission to foreclose on a house or repossess property.
The two most common reasons a secured creditor files a Motion for Relief from Stay are as follows:
1. If you surrendered property in your bankruptcy, such as a house or a car, the creditor will file a Motion for Relief from Stay in order to get permission to proceed with foreclosure or to repossess the property.
2. A secured creditor may also file a Motion for Relief from Stay because you’re behind on your mortgage payments since filing bankruptcy. If you agree you’re behind on your payments, we may be able to work out a consent order with the creditor to allow you to resume making your regular payments plus an additional payment to catch up on the amount you’re behind.
The goal in a bankruptcy is to avoid a Motion for Relief from Stay if you are not already surrendering your property because a Motion for Relief from Stay can create additional attorney’s fees and may cause you to have problems in your bankruptcy proceedings. In most bankruptcy cases, however, a Motion for Relief from Stay is not filed and the bankruptcy process goes smoothly.