When a debtor files for Chapter 13 bankruptcy an automatic stay immediately goes into effect, preventing creditors from taking further action against, so long as you repay your debt. However, when payments are not made, the creditor can then file a Motion for Relief from the Automatic Stay, allowing them to take action against you.
What Is an Automatic Stay?
If you file a Chapter 13 bankruptcy petition, an automatic stay goes into effect, which prevents creditors from taking further action against you to collect the funds, unless authorized by the court. The secured creditor is only allowed to move forward if no payments are received from the debtor.
The automatic stay gives the debtor some time to submit a plan and pay their creditors; however it can be lifted to allow a creditor to resume collections outside of the bankruptcy case. A loss of an automatic stay can occur when a creditor files a Motion for Relief from the automatic stay with the bankruptcy court.
How Can I Prevent a Lift of the Automatic Stay?
Stay Current on Chapter 13 Payments
The simplest way to avoid a loss of automatic stay is to keep Chapter 13 plan payments current. When you fall behind on payments, a creditor has the right to contact the bankruptcy court and request a Motion for Relief.
Keep Mortgage Payments Current
Another way to avoid loss of automatic stay is to keep monthly mortgage payments current. If a debtor owes a mortgage on their home when filing for Chapter 13 and does not pay after filing, the mortgage creditor has the right to file a Motion for Relief.
Keep Insurance Coverage on Your Home and Vehicles
The last way to prevent a loss of automatic stay is to keep your home and vehicles insured. If money is owed on either property, a debtor must maintain insurance on the property in the event it’s damaged. If it’s not maintained, a creditor may file a Motion for Relief to take back the property.
Contact a Bankruptcy Attorney Today
If you’re considering filing for bankruptcy and want to speak to an experienced attorney about what’s best for you, contact an attorney at CMC Law today. We will work with you to decide how to move forward.
Charles is absolutely a brilliant attorney! He is a critical thinker and determined problem solver. He is very accessible, even via text. If he is in court, his ability to multi-task, you can feel safe and secure in knowing he is handling any issues or concerns. I entrust him with my future, he is a uniquely talented attorney who always challenges himself to achieve the absolute best outcome for his clients.
I was very satisfied with Mr. Clapp services. He is a man of his word and did everything he told me he would. I would highly recommend him.
I came to Mr. Clapp by referral with a complicated case involving both personal and business debts that were out of control. Mr. Clapp evaluated the situation and gave me options that I was not even aware of. He knows his stuff, executed flawlessly, and I have been able to start over. I highly recommend Charles Clapp if you have debt or bankruptcy issues. Listen to his advice, he knows his stuff. I consulted with several other bankruptcy attorneys prior to retaining Mr. Clapp, and they did not have the same breadth of knowledge that Mr. Clapp brought to my case.
I selected Charles Clapp to handle my bankruptcy based on his already positive reviews and I am glad that I did! He was very accommodating to my schedule and made my negative life experience positive. I was actually very surprised how easy he made the process. Life happens and it’s great to be represented by someone that understand that!!! Stop your attorney search with Charles Clapp!!!