How to Lift a Bankruptcy Stay

The bankruptcy court can give you the green light to collect by lifting the automatic stay.

The federal Bankruptcy Code requires that creditors cease attempts to collect on debts after a debtor has filed a bankruptcy petition. This law imposes an automatic stay on the creditors, and a creditor wishing to collect on a debt while the automatic stay is in place must seek to have the stay lifted by going through the bankruptcy court. All motions and other filings must be filed with the court clerk. All documents must contain the correct caption. The caption should include the chapter of the Bankruptcy Code under which the debtor has filed.

Things You'll Need

• Motion and supporting documents

Instructions

Filing the Motion

1. File a motion. The creditor must file a motion to lift the automatic stay. The creditor must attach a cover sheet to the motion. The debtor must also include a declaration with the motion, which would include admissible evidence supporting the factual basis of the motion. The debtor must also include an account statement if the motion alleges that the debtor has defaulted in making payments to the creditor.

2. Obtain a hearing date.

3. File and serve a notice of hearing that provides explicit notice of the deadline to file an opposition statement and notice that the court may grant relief without a hearing if the debtor does not file a timely opposition statement.

4. Serve all parties involved. After the motion has been filed, the creditor should promptly serve notice upon the debtor, the debtor’s attorney, the trustee, any appointed committee or its attorney, any party with a security interest in the property involved and any party to the continuation of an administrative or judicial proceeding.

5. File a reply memorandum. If an opposition has been filed by any of the parties mentioned above, the creditor must file a reply memorandum no later than three days before the date of the preliminary hearing.

6. Request an order for relief. If no opposition has been filed in a timely manner, the creditor may request the entry of an order by filing a declaration and a proposed order that conforms to the form order of the creditor’s local bankruptcy court. The court may grant relief from the stay: for cause; if the debtor does not have equity in the property; or if the property would not be needed for an effective reorganization.

Tips & Warnings

• Submit all documents by their deadlines.

• If your documents are not filed timely, your motion will be dismissed.

References

• Cornell University: Automatic Stay
• United States Bankruptcy Court District of Hawaii: Local Bankruptcy Rules