Relief from Stay in Bankruptcy

Relief from Stay in bankruptcy is an important subject. When a debtor files for bankruptcy, an automatic stay goes into effect prohibiting creditors from taking any action of any kind to collect a debt. It stops all lawsuits including foreclosures and evictions. It’s against federal law for a creditor to violate the stay. However, creditors have the right to ask the bankruptcy court to lift the stay, which is done by the filing of a Motion for Relief from Stay. Once the motion is filed, the debtor has the right to defend the motion. If the stay is lifted, the creditor may then proceed with its collection efforts, typically completing its foreclosure action.

The local rule in Southern District of Florida amendments include the following amendments:

• Filer must attach a proposed order as an exhibit to the motion unless the relief to be granted in the order is the identical relief requested in the motion.
• A motion for relief in chapter 7 case cannot be filed under negative notice until after the date first set for the § 341 meeting.
• It shall not be necessary to seek relief from the automatic stay for the holder of a secured claim to negotiate with a pro se debtor or with debtor’s counsel regarding potential modifications of the loan.
• Requires service on seven largest creditors in the absence of a committee.
• Removes the requirement to file a certificate of no response or settlement.

The automatic stay generally applies only to actions against a debtor. However, in chapter 12 and 13 cases, the stay also applies to non-debtors who are also liable on a consumer debt of a debtor, such as a joint credit card, or a car loan co-signed by a debtor’s relative. It is not limited to spouses of a debtor. It applies to any person who is jointly responsible for a debt. Creditors seeking relief to continue their collection efforts against a co-debtor must seek relief under §1201(c) or §1301(c).