Can a creditor obtain relief from the automatic stay in a bankruptcy?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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When an individual files for bankruptcy, he or she is immediately put under a legal protection referred to as an automatic stay. This automatic stay means that creditors cannot attempt to collect money from the person until the discharge or dismissal of the bankruptcy takes place. A creditor does have the option of appealing to the court and requesting relief from the stay. If granted, this means that they will be allowed to pursue what they are owed even before the bankruptcy process is completed. 

When Is Relief From an Automatic Stay Granted?

A creditor can seek relief from the automatic stay in bankruptcy court by filing a motion in the court and persuading the judge to grant relief. An order granting relief from the automatic stay permits a creditor to take certain specified actions to collect a debt against you, which will be spelled out in the order. The relief may include permission to foreclose or repossess, to seek recovery under an insurance policy, to continue an action against you in a state court, and/or other specific permissions.

The creditor has a greater chance of having a judge grant the automatic stay relief if the creditor is able to prove that not getting the debt payments is causing serious detriment to them in some way.  For example if a landlord has a pending action to evict you and it is believed that you are engaging in illegal behavior in the apartment, or if the landlord is unable to pay his mortgage because you are not paying rent, either of these might be examples of a situation where the creditor has a compelling need for an automatic stay.

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Getting Help – Bankruptcy Automatic Stay

If you are involved in bankruptcy, either as a creditor or as a debtor, having a lawyer on your side to assist you in dealing with the complexities of the United States Bankruptcy Code is essential.

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