When May a Creditor Request a Lift of an Automatic Stay in New York?

In a bankruptcy case, the automatic stay prevents creditors from continuing to pursue collection actions while the case is underway. It’s a powerful protection that gives borrowers vital breathing room during the case.

Yet there are scenarios in which a creditor can request to have the automatic stay lifted.

Which creditors may lift the automatic stay?

Generally a creditor may lift the automatic stay when:

  • The debt is secured (usually this is a home loan or auto loan).
  • There’s a concern that the debtor will damage the secured property, thus decreasing its value.
  • If the debt is not secured, it must be non-dischargeable. This would usually be a child support or alimony debt and the person seeking the say would like permission to continue collecting payments. 

Creditors usually seek to have the stay lifted in their case so that they may proceed with a foreclosure or repossession. Landlords may also attempt to have the stay lifted so they may proceed with an eviction.

When can an automatic stay be shortened?

If you file bankruptcy too often you lose some of the protections offered by the automatic stay. If you file twice in one year, then the automatic stay is limited to thirty days. If you file three times during one twelve-month period, the automatic stay goes away altogether.

Generally, this many filings take place only when a debtor’s bankruptcy case is dismissed for some reason. Avoiding dismissal is one major reason why it’s so important to work closely with an experienced bankruptcy attorney. 

Can you protest the attempt to lift the automatic stay?

Yes. Your creditor will file a motion to lift the stay. Your attorney will file an answer to the motion arguing against the creditor’s reasons for attempting to have the stay lifted. 

For example, your attorney may be able to prove you’re taking good care of your home during the bankruptcy process and show, through home valuations and comparable home sales in the area, that there is no reason to suspect that your home is losing value. 

Bankruptcy Can Be Complicated

These are very simple examples and explanations. There are times when bankruptcy cases can become a complicated back and forth of motions and allegations that must be met and dealt with during the process.

Don’t try to handle a bankruptcy case alone. Reach out to our law firm to schedule a free consultation today. We’ll develop a strategy to help you keep your bankruptcy case as smooth and as uneventful as possible.

See also:

Can Bankruptcy Stop Foreclosure in New York? 

How to Prepare for Your Free Bankruptcy Consultation?  

When Does It Become Absolutely Critical to File for Bankruptcy?


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