Can the Automatic Stay Be Lifted?

The primary purpose of an automatic stay is to provide you with immediate relief from creditor interference while you try to get your financial footing. While this is one of the key perks of an otherwise challenging bankruptcy process, you must understand that the Kentucky bankruptcy court can revoke this privilege at any time, and for good reason. Well, please continue reading to learn whether the automatic stay can be lifted during your case proceedings and how an experienced Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can prevent this from happening.

Can the automatic stay be lifted during my bankruptcy?

Once your creditors are notified of your bankruptcy filing, they may respond by filing a motion to lift your automatic stay. They must provide a compelling cause for this. For a Chapter 7 bankruptcy case, they may argue that their interest in a property may be harmed if the stay remains in effect. For example, they have a lien on your home or car, and the bankruptcy trustee would otherwise have an interest in liquidating it to pay back the respective creditor.

Or, they may state that you do not necessarily have equity in the property you are trying to protect. Regarding your mortgage loan, say the balance is $200,000 when your home is worth no more than $150,000. If you are not making your monthly mortgage payments on top of this, your creditor may claim that they losing more and more money as your home continues to depreciate instead of being sold.

When it comes to a Chapter 13 bankruptcy case, your creditor may contend that the property in question is not part of your court-ordered three- to five-year repayment plan. This may be if it is a joint property in which you only have partial ownership rights. Or, they may attempt to argue that your outstanding debt for this property is so significant that it is close to impossible to manage its repayments in your established plan. This may be especially given all the other debts you must keep up with.

Can the automatic stay not go into effect at all?

You must understand that the Kentucky bankruptcy court may not even entertain the automatic stay option if you have already filed multiple bankruptcies in the previous year. At the very most, the stay may only last 30 days if you filed one bankruptcy petition the year before.

Or, your creditors may similarly come forward with a motion and claim that your multiple bankruptcies prove you are acting in bad faith. Specifically, they may argue that you are abusing the bankruptcy system to evade paying creditors, and therefore that they require relief from your wrongdoings.

Here, you must do everything to demonstrate that the multiple bankruptcies within a short period were necessary. For example, you may cite a job loss due to no fault of your own, an unexpected and serious medical diagnosis, a divorce petition filed by your spouse, or another life-altering event beyond your reasonable control.

If you find yourself up against this, please do not go through it alone. Instead, pick up the phone and speak with a skilled Louisville, Kentucky consumer bankruptcy lawyer. Our team at Schwartz Bankruptcy Law Center wishes to aid you during this difficult point in time.