Relief from the Automatic Stay

An automatic stay is initiated when a debtor files their bankruptcy petition. The stay, however, is not necessarily absolute. Some creditors may request relief from the automatic stay, and if they are successful, they can continue their debt collection efforts against the debtor.

To request a relief from the automatic stay the creditor must file a motion with the bankruptcy court. After the motion is filed, the debtor can request notice and a hearing. During the hearing the creditor must provide evidence to the court proving that the stay should be lifted for "cause."

For instance, secured creditors may request the automatic stay for secured debts be lifted if the debtor has stopped making debt payments and the asset is not protected. For example, if a debtor has stopped making house payments the creditor may request a relief from the automatic stay so they can continue with the foreclosure process. Consider, however, the creditor must be able to prove they have standing. For instance, during the mortgage crisis some mortgage lenders, who had bought and sold mortgages, could not prove they were the mortgage lenders who currently owned the mortgage.

Unsecured debtors may also be able to request a relief from an automatic stay. This is generally done for debts which would not be discharged in bankruptcy such as child support payments, certain tax debts, spousal support and criminal restitution. If the creditor is able to obtain relief for the automatic stay from the court they can continue to collect debt payments.