Abandonment And Relief From Stay - BANKRUPTCY
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BANKRUPTCY: Abandonment and relief from stay
The automatic stay prevents secured creditors from enforcing their lien rights. However, the stay will end when the bankruptcy case is closed, which usually occurs within five to seven months after the petition is filed in a "no-asset" case and much later in asset cases, or when the case is dismissed, which occurs infrequently. The automatic stay on property that has been abandoned by the Chapter 7 trustee ends when the discharge has been entered, which usually happens approximately 100 days after the petition is filed.
Because the stay on abandoned property ends on the date of discharge, secured creditors often ask that the Chapter 7 trustee abandon his or her interest in their collateral at the creditors' meeting. In support of this type of request, a creditor (or its lawyer) will submit a formal written request for abandonment, together with copies of documents which evidence the perfection of the creditor's lien or encumbrance and a statement of the projected wholesale value of the secured property.
Good practice suggests that the creditor request that the Chapter 7 trustee sign a copy of the abandonment request at the meeting. If the trustee abandons the creditor's collateral, the creditor may enforce its rights against the collateral (not the debtor) in accordance with its contract and applicable state law on and after the date of discharge.
Secured creditors who are not content to wait for the discharge (for example, because their collateral is depreciating) often will request that the Bankruptcy Court lift the automatic stay on their collateral by having their attorney file a written motion. There is a fee to file a motion to lift stay (currently $75) and there may be as many as two hearings before the matter will be decided.
The process normally will be resolved either by consent or, at the latest, approximately 60 days after the motion is filed. Typical grounds for lifting the stay are the debtor's nonpayment on the debt secured by the collateral, the fact that the collateral is worth less than the debt owed, or the fact that the collateral's value will be jeopardized unless the creditor recovers it.
An attorney who is experienced in bankruptcy litigation should file a motion for relief from the stay.
ADDITIONAL BANKRUPTCY RELATED FACTS
Personal Bankruptcy...what Is It?What Are The Most Common Reasons For A Chapter 7 Bankruptcy?Will I Have To Give Up Any Of My Property To My Creditors?I Went Through A Bankruptcy Last Year - Will I Ever Be Able To Get Credit Again?When Is A Chapter 13 A Better Alternative Than A Chapter 7?What Don't I Keep?What Do I Do If Someone Has Filed For Bankruptcy In My Name?| Find Credit Facts |
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