The filing of a bankruptcy petition imposes an automatic stay on all actions of creditors against a debtor. This means that foreclosures and post judgment collection activities are put on hold at that time. A creditor may be penalized by the court if it violates this automatic stay. The source of the automatic stay is Section 362 of the United States Bankruptcy Code.
This does not mean that creditors are without any rights. For example, in the case of a Chapter 7 debtor owning a home who is delinquent in his mortgage payments and who does not intend to keep the home, the mortgage lender is wise to file a motion to vacate the automatic stay, to enable the lender to proceed with foreclosure.
A debtor may wish to oppose a motion to vacate stay. For example, if a Chapter 13 debtor fails to make post-petition mortgage payments, the creditor has the option of filing a stay motion. It makes sense for the debtor to file opposition if some part of the creditor’s motion is factually inaccurate, e.g. the debtor is only behind three payments, not six payments as claimed by the creditor. Or the debtor may wish to propose terms for curing the payment arrears. Typically the attorneys for the debtor and creditor work out the terms of a consent order to be submitted to the court for entry to resolve the motion.
The resolution of motions to vacate stay can be complicated and you are best served to have the advice of counsel, if you are a debtor. As a creditor, you usually would always be represented by an attorney who would prepare and file the stay motion for you. Please contact us for further information at 732-214-0300.