In order to answer this question, you need to understand what a motion for relief from stay is seeking to do. When you filed your Chapter 13 case, the automatic stay went into place. With a few limited exceptions the automatic stay puts a “hold” on all creditor actions that have been filed or that could be filed against you. The automatic stay is the legal mechanism that stops foreclosures, bill collector phone calls and even state court proceedings.
By law, creditors are blocked from doing anything as long as the automatic stay remains in force.
When a creditor files a motion for relief from stay, that creditor is arguing to your bankruptcy judge that the automatic stay should be lifted so that creditor can take certain actions against you.
No Opposition Orders Granting Relief from Stay
Sometimes, you and your attorney will have no reason or basis to oppose a motion for relief from stay in your Chapter 13 case. For example, you may have included in your plan a provision to surrender a house, car or other secured property. The creditor has to get relief from stay before it can legally take possession of your property. In such a case, your attorney will sign a consent order which provides that you have no opposition to the creditor’s motion.
In such a case the creditor will get relief from they stay solely for the purpose of taking back its property. It still cannot come after you for any financial claim, nor can its representatives contact you for any reason. Further, if the creditor takes back the property and sells it for more than what is owed, the creditor must send your Chapter 13 trustee the difference which will be paid into your plan.
Contested Motions for Relief
Sometimes creditors will file Motions for Relief to regain possession of property that you want to keep in your Chapter 13 case. This happens if the creditor believes that your plan does not offer “adequate protection” to the creditor. For example if you are hoping to keep your home, your plan will provide that you will pay your regular mortgage payments directly to the creditor during the term of your plan.
If you fall behind on your payments, the mortgage lender will file a Motion for Relief to force you to either bring the payments current or surrender the property.
Similarly if you fail to keep your encumbered property insured, the lender may file a Motion for Relief, again for the purpose of forcing you to provide insurance proof or deciding to surrender the property.
Contested motions for relief often end up on a hearing calendar to be heard by your judge. In cases where you are delinquent on direct mortgage payments, you may be able to negotiate a deal to cure the “post petition arrearage” with your lender over the next three to six months. If negotiations break down because the lender wants a larger cure than you want to pay, or the lender simply does not want to agree to anything, your judge has to make a decision.
If you and your attorney can convince the judge that your lapse in payments was the result of unusual circumstances and that you do have the capacity top pay, then the judge may deny the motion and impose a “cure” on the lender. You also run the risk that the judge will accept the lender’s argument that your proposed cure is not fair to the lender or that it is not feasible. Most lenders and debtor’s attorneys know generally what types of settlements that bankruptcy judges will impose so most contested motions for relief are settled.
If you receive a motion for relief, you should contact your lawyer immediately as these motions are time sensitive.