What Does ‘The Automatic Stay Has Been Lifted’ Mean?

The automatic stay is one of bankruptcy’s most powerful protections. It stops collection calls, wage garnishments, repossessions, and foreclosures the moment you file. You get breathing room to address your debts through the bankruptcy process.

When the automatic stay is lifted, a creditor successfully petitioned the court. They can now resume collection actions for that specific debt. Your car can be repossessed or your home foreclosed.

How Does the Automatic Stay Work?

The automatic stay grants immediate relief from collection activities during bankruptcy. It’s outlined in federal bankruptcy law and kicks in automatically when you file. You can focus on resolving financial issues without collection pressure.

The bankruptcy court sends notices to all your creditors after you file. They get creditor information from the creditor matrix you included with your petition. Creditors and debt collectors must immediately stop all collection efforts. Phone calls, wage garnishments, and foreclosure actions must cease.

Collection activities may continue briefly since notices are sent by mail. But if you inform a creditor about your bankruptcy filing yourself, they must stop immediately. Continued contact after notification violates the automatic stay. Courts can impose penalties on violating creditors.

The Automatic Stay in Chapter 7 vs. Chapter 13 Bankruptcy

The automatic stay begins as soon as you file bankruptcy. Chapter 7 or Chapter 13 both trigger the stay immediately. In Chapter 7, the stay temporarily stops collections while your case is reviewed. Chapter 7 cases typically resolve within a few months, so protection is short-term.

In Chapter 13, the automatic stay lasts much longer. Chapter 13 involves a 3-5 year repayment plan. The stay protects you from creditor actions while you make payments. You catch up on overdue debts like missed mortgage or car payments. Chapter 13 gives you a chance to keep property and manage debts.

Chapter 7 provides a quicker path to resolving debts. Chapter 13 focuses on creating a repayment plan. These differences influence how the automatic stay works and how long it remains effective.

How Long Does the Automatic Stay Remain in Effect?

The automatic stay provides immediate relief but is temporary. It generally remains in place until the bankruptcy judge enters a discharge order. After discharge, you’re no longer responsible for unsecured debts incurred before filing. The permanent protection from discharge is much stronger than the automatic stay.

There are exceptions for people who file multiple bankruptcy cases. We discuss those situations below.

What Is a Motion for Relief From the Automatic Stay?

A motion for relief is a request creditors make to resume collection actions. It’s also called a stay relief motion. Both secured and unsecured creditors can file these motions. Secured creditors are more likely to file them.

Secured creditors hold loans backed by collateral. Common examples include mortgage lenders and car loan companies. They have a security interest in the property they financed.

Secured Creditors and Stay Relief Motions

Secured creditors most commonly file for relief from the automatic stay. Mortgage lenders and car loan lenders are typical examples. The collateral acts as security because creditors can take it back if you don’t make payments.

Filing Chapter 7 allows you to walk away from unsecured debts. But it doesn’t offer permanent relief for secured debt if you’re behind. Creditors can file stay relief motions to remove automatic stay protection. They want to resume collection efforts and take back the secured property.

If you file Chapter 7 while behind on mortgage payments, your lender can file a motion. They’ll ask the court to allow them to resume foreclosure proceedings. The court will likely grant the request because the creditor is entitled to move forward.

If you’re current on your mortgage when you file Chapter 7, creditors rarely file motions. Even if they did, the court likely wouldn’t grant it. The creditor isn’t experiencing any harm.

Responding to a Motion for Relief From the Automatic Stay

When a creditor files a motion for relief, they send you a copy. You and your attorney receive it after they submit to bankruptcy court. You have 14 days to respond to the motion. If you don’t respond, the court grants the motion by default.

You might choose not to respond if you’re surrendering the collateral anyway. If you decide to surrender your home, the creditor can resume foreclosure once the order is granted. But if you want to keep your home and are current on payments, you should respond. The court will set a hearing date for both parties to present evidence.

The first hearing is mainly an opportunity to state your case. The bankruptcy judge may ask each party to submit documentation before a final hearing.

The Stay Has Been Lifted: Now What?

Once a creditor gets a court order lifting the automatic stay, they can move forward. Foreclosure or repossession of secured property is now allowed. But creditors still need to follow state law for collection or eviction proceedings.

You may want to contact the creditor directly at this point. You can arrange a mutually agreeable surrender or move-out date. You have the chance to make a plan instead of facing surprises. Your car won’t disappear unexpectedly or your house suddenly lock you out.

Surrendering secured property through bankruptcy has an additional benefit. Any unsecured portion of the debt gets wiped out with your discharge. Late fees or penalties are included. If you surrendered secured property without bankruptcy protection, you could owe a deficiency balance. You’d lose the property and still be paying on it.

Sometimes the Automatic Stay Lifts Automatically

The automatic stay ends when the discharge is entered. It’s no longer necessary at that point. But other ways exist for the automatic stay to end automatically. Creditors don’t need to file a motion with the court. Speaking with a bankruptcy attorney for free can help you understand these scenarios.

The stay can end if you don’t follow through on your Statement of Intentions. Prior bankruptcy filings also affect the stay. You need awareness of these situations so creditor actions don’t surprise you.

The Statement of Intentions and the Automatic Stay

One form you file in Chapter 7 is called the Statement of Intentions. You list all secured debts and choose one of four options for each:

• Surrender the property

• Redeem the property by paying off its value

• Reaffirm the debt by continuing payments on loans you want to keep

• Retain the property by remaining current on payments

You must carry out your stated intention within 30 days. The deadline is 30 days from the first scheduled date for your meeting of creditors. Otherwise, the stay lifts automatically for that debt. The creditor can proceed with collection efforts.

Additionally, vehicles have a 45-day deadline. If you don’t enter a reaffirmation agreement or file a motion to redeem the debt by then, the vehicle can be legally repossessed.

How Do Prior Bankruptcy Filings Affect the Automatic Stay?

Prior bankruptcies impact the automatic stay. If you filed a bankruptcy case within the last year, the automatic stay only lasts 30 days. You need to retain the stay’s protection for your entire bankruptcy. You or your bankruptcy lawyer must file a motion to extend the automatic stay within those 30 days.

Key Points About Lifted Automatic Stays

The automatic stay is often a motivating factor for filing bankruptcy. It offers immediate protection from creditors. But in Chapter 7 bankruptcy, creditors can ask the court to lift the stay. They file before discharge if you’re behind on secured debt payments like car loans or mortgages.

You have the option to state your intentions for dealing with each secured debt. But you must follow through on your intentions. Otherwise, the stay lifts automatically and creditors resume collection efforts.