Debt collectors never give up.

Summary: Are you concerned that you're going to miss that next payment to your creditor? Thinking you're protected because you filed bankruptcy? Sometimes a creditor can file to lift a stay order and collector on your debt. Learn why you might be on the hook for that old debt.

A motion to lift stay is a suit filed by a creditor in a bankruptcy case against a debtor. The lawsuit aims at helping a creditor to repossess the collateral. If well-executed, it enables a creditor to get back a car, or any collateral surrendered in a bankruptcy case. Should the stay orders fail to be lifted, a creditor may not reclaim collateral from a debtor.

Typically, the motion filed by a creditor doesn't necessarily ask for money but targets to repossess its collateral from a debtor. In this case, a creditor cannot ask for money from a debtor since it goes against the bankruptcy code. To avoid the back and forth confrontation between a debtor and a creditor, the only solution is to pay back the creditor's money. However, a creditor should only claim back collateral if a debtor is behind schedule in servicing debt.

Under such circumstances, a creditor has a right to file a lift stay motion to reclaim collateral because the debt is not protected. If a debtor is fully servicing the debt as agreed, then a creditor has no right to file a motion to reclaim its collateral. Notably, filing for bankruptcy does not mean a debtor cannot reclaim surrendered property as collateral. If a debtor stays on schedule in debt repayment, a creditor is under no obligation to file for a lift stay motion.

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How a Debtor Can Avoid Lift Stay Motion

To avoid back and forth confrontation with a creditor, a debtor can fight back in many ways.

1. Stay Up-to-Date With Debt Repayment

A debtor usually finds him/herself at loggerheads with creditors for failing to repay debt in time. It is under such pretext that creditors go to the extreme to recover their money. Therefore, being current with debt repayment is a perfect way of avoiding legal battles.

2. Fight Back in a Lawsuit

If the creditor and a debtor fail to strike an agreement, both parties may choose to square it out in a bankruptcy court. A debtor can fight back a motion brought by a creditor intending to suspend a lift order. This scenario is common in mortgage-related cases where creditors file a motion of lift order without sufficient proof on whether they received the deed.

3. Out of Court Settlement

An out-of-court settlement is a perfect alternative dispute resolution mechanism in many judicial processes. A debtor and a creditor may choose to agree on an amicable repayment schedule. In such a case, a creditor may not file a lift order motion.

Should the stay be lifted, creditors have a right to reclaim their collateral based on existing state laws. This further means that creditors can reclaim their security using the same procedure they would before the debtor's bankruptcy filing. In that case, a debtor hoping to use collateral in a bankruptcy case cannot underestimate the weight of a lift stay motion.

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How Does an Automatic Stay Work?

Generally, an automatic stay is a legal process that protects debtors from the wrath of creditors. When granted, it bars creditors from initiating any debt recovery process against debtors. This option saves debtors from imminent foreclosures, garnishment, and other debt recovery actions by creditors.

The Bankruptcy Code is an essential legal provision that protects anyone who intends to file for bankruptcy. The code grants automatic stay to debtors who risk facing the wrath of creditors.

It is considered automatic stay since it automatically applies immediately when a debtor files a bankruptcy petition. The law ensures a notice is sent to all debtors targeted in the bankruptcy case.

The notice serves to signal all creditors to stop any collection plans against debtors immediately. The downside is that any delays in serving the notice to creditors may easily subject a debtor to the creditor's actions.

This is because it may take some time before debt collectors or recovery agents get a notice suspending debt recovering actions. On the flip side, should creditors proceed with debt collection activities even after being notified by a debtor by word of mouth or any other notice, they stand a chance to be sanctioned by a bankruptcy court.

Automatic Stay for Debt Relief

An automatic stay is ideal for debt relief. It saves debtors from the wrath of creditors before they execute their recovery mission. During the legal process, the order of charge refers to a bankruptcy case where a debtor gets absolved from some or all debts.

Typically, the chapter 7 bankruptcy legal provision sets you free from all your unsecured debts. Some of the unsecured debts include any available credit card balance and medical bills. On the contrary, the legal provision doesn't absolve debtors from child support-related debts.

The key intention in a bankruptcy suit is to freeze all assets owned by the filer of the case and distribute the proceeds collected from the process to pay creditors. However, a debtor can still protect all or some of these assets by filing for exemptions.

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When Does the Automatic Stay End?

Though automatic stay gives immediate reprieve from facing the wrath of debt collectors, it is usually temporary. It only remains in force until the discharge is entered. The only relief is filing for chapter 7 to shake off unsecured debts.

The protection granted by discharge is permanent and effective, unlike the automatic stay order. Therefore, a debtor should file for chapter 7 immediately to get permanent relief for some of the unsecured debts.

What Happens If an Automatic Stay Is Lifted?

Unfortunately, if a creditor gets a court order lifting the automatic stay order, the creditor is at liberty to reclaim the debtor's assets to secure the debt. Regardless of the prevailing circumstances, creditors must follow the law in the entire debt recovery process.

In that case, a debtor can arrange the best way to surrender assets to creditors in an amicable manner. This arrangement helps avoid unnecessary drama associated with the debt recovery process.

If you are in debt and facing debt collectors' wrath, it's high time you utilize the existing legal framework discussed on this page. Whether you intend to file a motion to lift stay, consider applying for Chapter 7 bankruptcy to resolve unsecured debts.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

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"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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