Tips And Guide For Debt And Loan Management

When a creditor requests court permission to continue collection activities it is called a relief from stay. If the court grants the motion, the stay is lifted for this creditor only. A relief from stay motion cannot be sought just because a creditor is angry at being included in a bankruptcy. If that were true, then every creditor would file a similar motion. No, there are only a few, specific circumstances where a relief from stay will be sought and granted.
Normally, if you have no equity in a secured item, such as a car or house, and you stop making payments, the court will grant relief from stay because the lender’s interest in the property is not being protected. For example, Vicky was two months behind on her mortgage and on the verge of foreclosure when she filed her Chapter 7. She intended to catch up her mortgage with the extra money she anticipated having after filing, but she never did. A month after filing, she was three months behind on her mortgage. In that case, her mortgage company would probably go to court and request relief from stay so that it could continue to foreclose. Because Vicky was continuing to fall behind on her mortgage, the court would likely grant the motion, and the automatic stay would be lifted as to this creditor.
The stay stops all proceedings against you. If you are involved in a dispute unrelated to your bankruptcy, such as a divorce, the stay can be lifted as to that matter.