One of the primary reasons my clients turn to bankruptcy is because of the legal protection it provides from debt collection activities. The moment we file a petition, the court issues a protective order, also know as the “automatic stay” which prohibits creditors from taking any debt collection activity. They have to stop calling, writing, garnishing, and suing you. Foreclosure and eviction actions also have to stop. As you can imagine, my clients feel a great deal of relief once their case has been filed.
In some circumstances, however, your creditors may ask the court to “lift” the protective order by filing a Motion For Relief From The Automatic Stay (MFRS). While creditors for most common debts like credit cards and medical bills won’t ask the court to do this (since they likely won’t have any legal grounds to do so), mortgage lenders and landlords are creditors who commonly file motions like these. When a creditors files a MFRS, it’s typically because they are in the middle of, or just beginning legal action, and they want to be able to continue. Mortgage lenders want to continue their foreclosure action, and landlords want to be able to evict you.
When a creditor files a MFRS, it will send a copy of it to you and to your attorney. At that point you have to decide how to respond. You can either let the court grant them their motion, or you can file a response to the MFRS. Your lawyer should be able to tell you whether you have any legitimate argument against the court granting the MFRS. You can’t just file a response that says, “no fair!” After your response time expires, the court will make a decision and issue an order, either granting or denying the MFRS.
If the court grants the MFRS, the creditor can continue with its legal action. That means you’ll have to defend whatever underlying lawsuit the creditor has or will file against you. It’s important to know about a creditor’s right to ask the court to lift the protective order, especially if you are filing Chapter 7 bankruptcy to stop a foreclosure. Unless you can cure your mortgage arrears (pay it current) or get a loan modification, Chapter 7 will probably only serve to delay foreclosure proceedings.
If you are considering bankruptcy and have questions about the process, we hope you’ll come into our office for a free, no-obligation consultation with an experienced lawyer. You can make an appointment using our online scheduling system or by calling 303.331.3403 to set up a time that is convenient for you.