What is a Motion for Relief from the Automatic Stay in Bankruptcy?

A Motion for Relief from the automatic stay is basically a request from a creditor to the Bankruptcy Court for permission to take back collateral.  Motions for Relief are set down for hearings before the Bankruptcy Court.  In Northwest Georgia, these hearings are held at the Federal Building in downtown Rome GA.  Debtors and their bankruptcy attorney have the opportunity to defend against the motion. If a creditor has good cause for filing the motion, it will be granted. If the debtor and the bankruptcy attorney can mount a reasonable defense, the request will be denied.

For example, lets say a person in a chapter 13 bankruptcy case falls behind on their mortgage payments. A mortgage company will file a Motion for Relief so that they may begin the foreclosure process. In this case, the debtor must prove they are current or payments or work out some type of deal to get current with the mortgage company.

Another example is when a person who is in a Chapter 13 bankruptcy lets their car insurance lapse.  The car creditor will file a Motion for Relief so that they can take car away from the debtor.  Most automobile contracts in Georgia require debtors to maintain full coverage insurance on vehicles that are collateral for loans.   Creditor usually withdraw the motion when the debtor proves she has insurance.

A third example is when a tenant falls behind on rent.   Before a landlord can begin an eviction process against a Georgia bankruptcy debtor, they will file a Motion for Relief as well. If the debtor can prove that the rent payments have either been made or have been caught up, the motion will be denied.

In a Chapter 7, creditors will routinely file a Motion for Relief for any collateral that the debtor is surrendering.  Many of my Chapter 7 clients get extremely frustrated when they receive these types of motions.  They will usually call me and say, “Hey, what is the deal? I have already agreed to surrender the car to creditor.  The bankruptcy petition is clear.  Why is this being set down for a hearing?”   I recently had a conversation like this with one of my Rome GA clients.   The reason for the motion is that the creditor cannot take action to repossess a car or foreclosure on a house without permission from the Court.

Any creditor seeking relief from the automatic stay in Georgia should hire a bankruptcy attorney. I do not ever represent creditors.

Other Posts:

1.  What do I do when the mortgage company won’t accept my payments?

2. What happens when I miss mortgage payments while I am in Chapter 13?

3. Can I quit my case if I don’t like the way things are going?

4. Can they take my car after I file bankruptcy?

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