When bankruptcy is filed one of the biggest benefits is that the automatic stay is in place right away. This legal mechanism prevents creditors from trying to collect their debt or from maintaining a lawsuit to do so. The automatic stay will put an end to foreclosures and also to wage garnishments. But when the stay is lifted, these benefits no longer exist. This is why it is important to understand what it means to have one of your creditors file a motion to lift the stay, and how that motion will impact your bankruptcy case.
The automatic stay prevents a creditor from taking action against you for collection of their debt, and if collection efforts persist the creditor can be held accountable for any damages caused by the violation of the stay. That said, what creditors typically do when they desire to pursue legal action regarding the debt in question is to ask the court to lift the stay. The impact on you and your bankruptcy case when the stay is lifted is that:
- A lender can resume legal action once an order lifting the stay is entered. This means any attempt to foreclose or repossess property will be picked back up where it left off when you filed your bankruptcy.
- Lifting the stay does not mean that the debt is due, but it does mean that the creditor is allowed to exercise their rights as to the property that secured the loan. So you should only look for a lender to make a request to lift the stay when the debt in question is a secured debt. Unsecured debts like credit cards are not generally the subject of a motion to lift the automatic stay.
You are permitted to object to the creditor’s request that the stay be lifted, but will have to provide a legal basis for your objection. If you have questions about what actions a creditor can take against you during bankruptcy, call our office. We will help you to understand the process so you can decide if it is right for you.
If you have questions about bankruptcy, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.