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If you are owed money and just received a notice of bankruptcy filing you may have the right to obtain relief from the automatic stay to continue foreclosure proceedings, repossess collateral or sue the individual or business that filed for bankruptcy protection. We represent creditors in the Bay Area and all divisions of the Bankruptcy Court for the Northern District of California. Are fees are reasonable and we will evaluate the bankruptcy case and determine the best course of action quickly and accurately. That may involve filing a motion for relief from stay.
Grounds for Motion for Relief From Stay Automatic Stay
11 U.S.C. §362(d) provides the common grounds to ask the bankruptcy court for relief from the automatic stay. Section (d)(1) provides on request of a party in interest and after notice and a hearing, the court shall grant relief from the stay . . . . for cause, including lack of adequate protection of an interest in property . . . or if the debtor does not have equity in such property and the property is not necessary to an effective reorganization. What is cause though for relief from stay? Cause can be many different things and it is not specifically defined in Section 101 of the Bankruptcy Code. Basically it depends upon the circumstances.
In Chapter 13 or Chapter 11 cases the most common reason for a creditor to seek relief from stay is because the bankruptcy filer fails to resume or make the monthly loan payment to a creditor after the bankruptcy case is filed. The filing of the bankruptcy case acts to cure the prepetition default by paying the missed payments in the plan of reorganization.
Mortgage Loans or Note Holders with a Recorded Deed of Trust
The most common reason for a party to seek relief from the automatic stay is when an individual or business is behind on their mortgage or note payments and the loan is secured by a deed of trust. In most Chapter 7 cases the bankruptcy filer is choosing to surrender the house or land securing the loan. They are not intending to try and catch up on the missed payments or chose to not continue to make the mortgage payments. Under these circumstances the note holder or bank has a right to seek relief from the automatic stay to continue or start foreclosure proceedings.
If a person or small business files for Chapter 13 or Chapter 11 reorganization they typically are trying to cure whatever default in payments exists at the time of filing and keep the house or property. Rarely are the defaulted payments plus interest, inspection fees or foreclosure costs added property and listed accurately in schedules or the plan of reorganization. See Objection to Confirmation for more information about inaccurate arrears. Once they filed for bankruptcy protection the filer must resume making the normal monthly loan payment. The whole point of them filing for bankruptcy is to catch up on the defaulted debt amount at the time of filing in the plan or reorganization and continue to make the normal monthly loan payment. If they do not stay current on the loan payments post-petition that is grounds to seek relief from stay the automatic stay. Generally most debtors will want to enter into an adequate protection order to prevent the court from granting relief from stay. An adequate protection order provides for repayment of just the missed post-petition normal loan payments that are unpaid.
Vehicle Loans
Just like a home or property lenders car lenders have a right to take back the collateral if loan payments are not made timely. Just like with real property loans on personal property that are in default can be cured in a plan of reorganization by filing a Chapter 13 or Chapter 11 bankruptcy petition. The missed payments are part of the plan of reorganization and the bankruptcy filer must stay current on the vehicle payments once the petition is filed. Depending upon the circumstances the bankruptcy filer may be able to reduce the amount owed on the loan and pay for the vehicle directly through the plan of reorganization. In this situation there are no payments made directly from the bankruptcy filer. All payments are made through the plan. A vehicle loan lender is still entitled to adequate protection though. A vehicle is a depreciating assets and a lender is entitled to be protected against the depreciation of the collateral. This usually addressed in an Objection to Confirmation and not a motion for relief from stay.
For more information about your rights if someone that owes you money filed for bankruptcy protection under Chapter 7, Chapter 13 or Chapter 11 please give us a call at 1-877-963-9543 to schedule a consultation at one of our convenient Bay Area Office Locations.
