In bankruptcy, a Motion for Relief from Automatic Stay (in short, an “MFRS”) is an attempt by a creditor to initiate or continue certain collection efforts. The Automatic Stay takes immediate effect in every bankruptcy case. The Automatic Stay prohibits creditors from undertaking any collection activities, including lawsuits, foreclosures, phone calls, garnishment, and repossession. A creditor may attempt to “lift” the stay by filing a MFRS. If successful, the debtor loses bankruptcy protection as to that creditor.
Motion for Relief from Automatic Stay
Secured creditors usually file motions for relief from the automatic stay. If you have a mortgage and miss payments during your Chapter 13, the mortgage company will file a MFRS to allow them to initiate foreclosure proceedings. Likewise, if you have a car loan and miss payments during your Chapter 13, the lender will file a MFRS to allow them to repossess.
In a Chapter 7, motions for relief can be filed by landlords to allow them to evict. And sometimes, in a Chapter 7, car lenders will file a MFRS to allow them to auction a vehicle that has already been repossessed. In other cases, where litigation has been ongoing, a plaintiff will file a MFRS to allow the lawsuit to continue despite the bankruptcy.
Defenses to a Motion for Relief from Automatic Stay
The best way to defeat a motion for relief from the Automatic Stay is to reinstate the loan. If you can afford to catch up post-petition payments in full, then the MFRS may be deemed moot. Likewise, if you can reinstate your loan in Chapter 7, then the MFRS is moot.
If you cannot afford to fully catch up the post-petition arrearage in full, then your attorney may be able to negotiate a consent order to resolve the MFRS. In a consent order, you will resume your monthly payments and spread arrearage payments over a short period of time, usually a maximum of six months. For this reason, resolving an MFRS sooner rather than later is usually in your best interest.
Talk to Your Lawyer
You must take seriously a motion for relief. You must respond promptly and attend the hearing. Try to resolve the issue prior to hearing. Do not simply ignore the motion.
The filing fee for a motion for relief is $176. Your creditor is not paying a fee (and paying their attorneys) just to scare you. They want to take your property.
Respond promptly to your bankruptcy lawyer to determine the best way to respond to a motion for relief from automatic stay.