Can a creditor lift an automatic stay?

Yes, a creditor can lift an automatic stay. Filing chapter 13 bankruptcy allows individuals to pay back the unsecured and secured creditors they owe through a repayment plan. The plan generally lasts for three to five years. The way chapter 13 works is that people, referred to as debtors in bankruptcy, makes monthly payments to a bankruptcy trustee. The trustee distributes the money to each creditor until the repayment plan is complete. However, debtors are also required to pay creditors such as mortgage companies and auto dealers if those debts are in bankruptcy. The best part about filing chapter 13 is that it comes with a legal protection called an automatic stay. The stay immediately stops creditors from starting, continuing or completing debt collection activities like foreclosure, wage garnishments and lawsuits. The automatic stay starts when the bankruptcy petition is filed and is supposed to continue until the petition is successfully discharged. Unfortunately, it can be lifted before chapter 13 cases are completed.

When debtors they make to the creditor or trustee, the creditor can petition the U.S. Bankruptcy Courts to lift an automatic stay. If the motion is granted, all creditors listed under the repayment plan are allowed to pursue debt collection activities. This means that a mortgage lender can pursue foreclosure, a creditor can sue or pursue a wage garnishment. In other words, the automatic stay disappears.

Debtors can try to stop a creditor’s motion to life the automatic stay before it happens. Therefore, debtors should talk to their lawyer about a bankruptcy modification.