Why File A Response In A Chapter 7 Motion For Relief From Stay?
By Susanne Robicsek, North Carolina Bankruptcy Attorney on Jun 22, 2009 in Automatic Stay In Bankruptcy, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy
Courts may grant a Motion for Relief from Stay in a Chapter 7 if it was filed because a debtor is behind on the mortgage when filed, and there is no equity in the property for creditors. Chapter 7 is not designed to stop foreclosures to give people time to catch up on their mortgages. That is what Chapter 13 bankruptcy is for. However, a motion for relief is often denied to stop a foreclosure to give a Chapter 7 Trustee time to sell property with equity that will go to pay creditors. That situation is if there is non-exempt equity in the property.
In a Chapter 7, the “Automatic Stay” (like a restraining order) prevents creditors from doing anything to collect a debt. The Chapter 7 automatic stay is a limited stay that ends a few months after filing Chapter 7 bankruptcy anyway. Therefore fighting to keep it in place only keeps it in place temporarily, even if the motion is denied. When granted, the borrower is still protected under state laws and foreclosures don’t occur if you are not in default. Therefore catching up the mortgage is the most important thing to do if you want to prevent foreclosure.
Whether or not you should file a response in your particular case is something that you should speak to your attorney about since each case is different and reasons to respond vary.
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