How to Fight a Motion for Relief From Automatic Stay

When you file for bankruptcy, an automatic stay protects you. Creditors must stop all collection actions immediately. Debt collectors can’t call, sue, or harass you anymore. The automatic stay gives you breathing room during your case.

But some creditors don’t want to wait. They file a Motion for Relief From Automatic Stay. This legal document asks the court for permission to continue collections. If granted, that creditor can pursue you despite your bankruptcy.

You can fight this motion and win. Understanding your defenses makes all the difference.

What Is a Motion for Relief From Automatic Stay?

A Motion for Relief From Automatic Stay is a formal request. Creditors ask the bankruptcy court to exempt them from the stay. They want permission to take action against you or your property.

Most creditors never file this motion. It’s fairly rare in bankruptcy cases. But when it happens, you receive formal notice. You’ll get a hearing date to argue against the motion.

The burden of proof falls on the creditor. They must prove their case to the bankruptcy court. You just need to show why their motion should be denied.

Real Example of Fighting the Motion

Consider Lucas, who filed for Chapter 13 bankruptcy. His automatic stay protected him from all creditor collection efforts. One creditor filed a Motion for Relief From Automatic Stay. But they never properly notified Lucas about the motion.

Lucas used a procedural objection at the hearing. He explained to the court he wasn’t properly served. The court denied the creditor’s motion immediately. Lucas remained protected throughout his Chapter 13 case.

If you’re considering bankruptcy, speak with a bankruptcy attorney for free to explore your options.

Why Creditors File These Motions

Creditors need good reasons to request relief from stay. Courts don’t grant these motions automatically. The creditor must prove their case deserves an exception.

Secured Debts Without Sufficient Collateral

Mortgage lenders file these motions most often. They do this when you’re behind on payments before filing bankruptcy. The lender argues there’s not enough equity to cover the loan.

Courts consider the equity in your property carefully. If the property value exceeds your loan balance, you’re usually safe. The court will likely deny the motion. But if you owe more than the property is worth, you face risk.

Auto lenders also file these motions for similar reasons. They want to repossess vehicles when loan balances exceed vehicle values.

Non-Dischargeable Unsecured Debts

Most unsecured creditors wait out your bankruptcy case. Credit card companies rarely file motions for relief. Chapter 7 bankruptcy typically concludes within four months anyway.

But some unsecured debts won’t be discharged in bankruptcy. These include certain tax debts, student loans, and fraud judgments. Creditors holding these debts sometimes request relief from stay.

In Chapter 13 cases, you must repay non-dischargeable debts fully. Your repayment plan spans three to five years. Most creditors with these debts don’t bother filing motions.

How to Defend Against the Motion

You must respond within 14 days of receiving the motion. Missing this deadline could result in automatic approval. Don’t let silence defeat your case.

Two main defense strategies exist: procedural objections and substantive objections. You can use one or both approaches. Your specific situation determines the best defense strategy.

Procedural Objections Attack the Process

Procedural objections challenge how the creditor filed the motion. These defenses focus on technical requirements and proper procedures. They’re often easier to prove than substantive defenses.

Creditors must serve you with proper notice. If they failed to follow service of process rules, object. The court may deny their motion based on this alone.

The creditor must also include specific documents with their motion:

• Detailed description of the property in question
• Current property value and appraisal information
• Original loan amount and terms
• Amount allegedly owed right now
• Original monthly payment and current payment amounts

Missing any of these documents gives you grounds to object. Point out the deficiency in your written response. The court takes these procedural requirements seriously.

Substantive Objections Challenge the Merit

Substantive objections attack the creditor’s actual argument. You’re arguing they don’t deserve relief under bankruptcy law. These defenses require more research and legal knowledge.

For mortgage lender motions, you can argue several points. Your Chapter 13 repayment plan may address the missed payments. If your plan was confirmed or will be soon, mention this. Show how your plan protects the lender’s interests.

Loan modification agreements strengthen your defense significantly. If you applied for or received a modification, tell the court. Lower monthly payments from a modification show you’re addressing the debt.

You can also argue the property has sufficient equity. If your home value exceeds the mortgage balance, the lender is protected. They’ll recover their money even if you sell later.

Real Court Case Victory

A real bankruptcy case shows these defenses work. The debtor had multiple liens on his home from various creditors. He filed Chapter 13 bankruptcy and notified all lienholders.

One lienholder acknowledged receiving the bankruptcy notice. But he never filed a proof of claim. He also didn’t object to the debtor’s repayment plan confirmation.

Later, this lienholder filed a Motion for Relief From Automatic Stay. He wanted to pursue collection efforts outside the bankruptcy. The bankruptcy court denied his motion completely.

Why did he lose? His failure to object to the plan hurt him. The plan still protected his interests with full payment. He waited too long and followed improper procedures.

You can achieve similar results with proper defenses. Work with a bankruptcy attorney to identify your strongest arguments. Get a free consultation with a bankruptcy attorney to build your defense strategy.

Your Response Timeline Matters

Act immediately when you receive a motion for relief. You have just 14 days to file your written objection. Courts strictly enforce this deadline in bankruptcy cases.

Your written objection should be clear and organized. State your procedural objections first. List each procedural failure by the creditor. Then present your substantive defenses with supporting evidence.

Attach any documentation that supports your objections. Include loan modification letters, property appraisals, or payment records. Evidence strengthens your position significantly.

Attend the hearing prepared to argue your case. Bring extra copies of all documents. Dress professionally and arrive early. Your appearance and preparation matter to the judge.

Alternatives to Fighting the Motion

Sometimes negotiating with the creditor makes more sense. You might reach an agreement before the hearing date. Creditors may accept payment arrangements or other compromises.

Your bankruptcy attorney can negotiate on your behalf. They understand what creditors typically accept. An agreement lets you avoid the hearing entirely.

You could also modify your Chapter 13 repayment plan. Address the creditor’s concerns in your amended plan. If their interests are protected, they may withdraw the motion.

Converting from Chapter 13 to Chapter 7 is another option. This strategy works if you qualify for Chapter 7. Consult your attorney about conversion before deciding.

When to Seek Legal Help

Fighting a Motion for Relief From Automatic Stay requires legal knowledge. Bankruptcy law is complex and technical. Small mistakes can cost you your automatic stay protection.

A bankruptcy attorney knows the procedural requirements perfectly. They’ll spot deficiencies in the creditor’s filing immediately. They also understand which substantive defenses apply to your situation.

Most bankruptcy attorneys offer free initial consultations. They’ll review your case and explain your options. The investment in legal representation often saves your property and peace of mind.

Don’t face this challenge alone and unprepared. Professional guidance dramatically improves your chances of success. Speak with a bankruptcy attorney for free to protect your rights.