On the day that you file for Chapter 13 bankruptcy, an automatic stay is issued against your creditors and remains in effect until the end of the repayment term. The automatic stay does three things. First, it stops collectors from contacting you. Second, it buys you time to develop your repayment plan. And, third, it freezes your assets, so no one creditor can grab them all.
Motion to Lift an Automatic Stay
In some situations, a creditor might file a motion to lift the automatic stay. This would allow them to resume collection actions.
One situation would be if you were behind on your payments for a secured loan, such as a mortgage or car payment, and the loan amount was greater than the value of the home or car. Your creditor in this circumstance is exposed to financial loss, and if you can’t make the payments current, the bankruptcy court may lift the automatic stay.
Another situation where you might encounter a motion to lift an automatic stay is in an eviction. Your landlord might ask to lift the stay so he can start or continue the eviction process while you are in bankruptcy.
Served with a Motion? What to Do First
If one or more of your creditors asks for relief from stay, you’ll know. This is because the law requires that you receive notice of the request and hearing date.
It is important that you respond to the notice within 14 days of being served. If you fail to respond within the designated timeframe, the court may lift the stay by default.
How To Fight A Motion To Lift An Automatic Stay
There are two fundamental ways you can fight a motion to lift an automatic stay for Chapter 13. The types of objections you can make are procedural and substantive. A procedural objection challenges the way the motion was filed, and a substantive objection challenges the substance of the motion itself.
A procedural objection is one where you challenge the motion because the creditor did not properly follow the rules. For example, you read above that the creditor is required to serve you with notice of the motion. If they didn’t properly serve you or other required parties—including your attorney—you may be able to challenge the motion.
In another example, say you were not given ample notice of the hearing date. You could make a procedural objection based on the fact that the creditor did not give you enough time to prepare for the hearing.
Finally, the documents that you are served must include a detailed description of the property and its value, as well as the amount of the loan, the amount owed, and the original and current monthly payments. A failure to attach these evidentiary documents could spur a procedural objection.
The second type of objection that you may make against a motion for relief is a substantive objection. This may be more challenging as it requires a thorough understanding of the Bankruptcy Code.
Imagine that your mortgage lender wants to foreclose on your home and files to lift the stay. You may be able to object to the motion on the grounds that your reorganization plan has been confirmed or is likely to be confirmed soon, and that the property is provided for in the plan. You might also be able to object if you have applied for or received a loan modification agreement that lowers the monthly payments on your mortgage.
The Burden of Proof
If you are fighting a motion to lift an automatic stay for Chapter 13, be aware that the burden of proof is on you. This means that you must provide detailed and specific supporting documentation for every objection and claim that you make.
Get Help Fighting A Motion to Lift the Automatic Stay
When a motion to lift the automatic stay in a Chapter 13 bankruptcy has been served, your financial future is at risk. You run the chance of losing your home, vehicle, or other important assets. If you need assistance fighting this motion or have any other questions surrounding Chapter 13 bankruptcy, contact the law offices of Michael J. Benson for your free consultation.