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Dec 2010

Right after filing bankruptcy: A Motion for relief from stay.

Posted by / in Virginia Bankruptcy / 15 comments

Before the housing crisis, I warned all my Chapter 7 bankruptcy clients, “make sure you are current on your house the day we file your case.”  If you went into Chapter 7 bankruptcy even one payment behind, the mortgage company would get relief from the automatic stay, and they’d start to foreclose.  Once that train left the station, it was hard to stop.

That’s still a good plan if you can do it; but not everybody can.  If you file Chapter 7 bankruptcy while the house is behind, the motion for relief from stay is important, but it’s not time to panic.

What to do when you get a motion for relief from the automatic stay?

Robert Weed

1.  If you can afford the house payment, and you want to be certain you will keep the house, then you need to get caught up.  In fact, you really should be caught up when the bankruptcy is filed.  Everybody knows, if you really want to keep your house, you need to get current and stay current.  That applies before bankruptcy, during, and after.

2.  If you don’t want to, or can’t afford to keep the house, make plans to move out.  See my blog on how long do I have.    (Remember to pay the home owners association!)   I suggest to many people that they file bankruptcy right before a foreclosure, to stop the foreclosure and get a little more time to live for free (except for the association) and save money for movers and the rent deposit.

3.  What if you need a loan modification?  Then it’s more complicated.  If you catch up (assuming you can), then you won’t get the mod.  You’ll never get a loan modification if you keep catching up.  At the same time, you don’t want to get foreclosed.  Trying to stay at least two, but no more than three payments behind is the safest place to get a loan modification.

Filing a motion for relief does not mean they have decided to foreclose you.   It may simply be their lawyers generating legal fees.  (Those fees will get put at the end of the mortgage if you get the mod.  If you don’t get it, the bankruptcy will wipe out what you owe so it doesn’t matter to you.)

The old rule was once they got relief from the stay, they went straight to foreclosure: that doesn’t apply any more.  Sometimes they do; sometimes they come with a mod offer much better than before; sometimes they wait for you to request a mod (again).  Really there’s no telling.

Once they get relief from stay, is there anything else I can do to stop them?

First, like I say, keep trying to apply for a loan modification.

Second, if your income has improved in a big way, you can file a Chapter 13 bankruptcy.  Under Chapter 13 , you would make your current payment, and make a monthly payment to the court to catch the house up.  Before the crisis, we did that a lot.  Now usually, if your income shows you can catch up, they will agree to that voluntarily.  So we don’t do that much any more.

Third, you can file against them in circuit court in your county, and make them prove they have the right to foreclose.  This is the Virginia approach to these foreclosure challenges in the news.  (In some states, they have to go to court against you to foreclose; in Virginia you have to go to court against them.)

There is one law firm I know of in Northern Virginia that does this.  Compliance Counsel. As far as I know, they have not gotten anyone a paid for house.  But they have, at least some of the time, gotten the mortgage companies to make a new mod offer, rather than fight it out.

Now, I got through all that strategy without explaining what a motion for relief from the automatic stay is.   If you are interested, that’s next.

Two bankruptcy protections.

People file bankruptcy to get protection from their creditors.   You get two kinds of protection.  You get long term protection from your debts.  That’s the bankruptcy discharge.   The discharge is your “new opportunity in life and clear field for future effort.”

Shorthand that’s your “fresh start.”   The Supreme Court said that your “fresh start” is the principal purpose of the bankruptcy code.

The bankruptcy discharge, about three months and two weeks after we file your Chapter 7 bankruptcy case, gets you your fresh start.  The discharge forbids anyone from taking any action to collect your discharged debts from you.

You get that discharge when your bankruptcy is approved.

The second protection, right when you file your chapter 7 bankruptcy case, is the automatic stay.  The automatic stay prevents your creditors from taking action against you–and it also prevents them from taking action against your property.  The automatic stay is sometimes called your “breathing spell.”

The automatic stay is temporary.  Why?  Because, when your bankruptcy is discharged–in about three months and two weeks–if you haven’t made your car payment, they are going to repossess your car.  And if you are not making your house payment, the mortgage company–at least the first mortgage company (maybe not the second)–will eventually foreclose on your house.

Unlike the automatic stay, the discharge does not stop people who are on the title or deed to your property from claiming the property, if you don’t pay.

Relief from the stay. Sometimes the creditors don’t want to wait that three months and two weeks, for the automatic stay to be replaced by the discharge.   They want it sooner.  The car creditors don’t want the car wrecked.  The mortgage companies–well who knows what they are thinking these days.

Anyway, they file a motion for relief from the automatic stay.  The judge will give them relief from the stay unless you are completely current.

As I said before, staying completely current, if you can afford the house, and want to keep it, is your best plan.  As I also said, if you need or want a mod, getting completely current means you won’t get the mod.  You need to go back to your strategy.

(One more thing to keep in mind.  Cash is king.  If you have the ability to catch up but want the mod, hang on to the money and see what happens.  You can always catch up later in the foreclosure process–you will need to cover the late fees.  Draining all your cash now, and then not being able to pay later, may not be smart.)

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Robert Weed has helped fifteen thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.

  • Jesse

    January 3, 2012, am31 11:51 AM

    testing this

  • msmariette

    March 16, 2013, pm31 8:20 PM

    Is there an “exented” automatic stay for tenants after or during the 341 meeting? Am I going to be served a 30 day notice to vacate or an immediate order to vacate premise?

    If I reject and unexpired residential lease, is the whole arrears debt forgiven or is there penalties?

    I only have two months left on an extended lease that expired last year in July 2012?

    • Robert Weed

      March 18, 2013, am31 6:44 AM


      Sorry, you’ve asked me a question I don’t know the answer to. Part of it depends on state law and I don’t know what state you are in. But even if you are in Virginia, I don’t know enough to tell you anything.

  • Kelli

    June 20, 2013, pm30 4:21 PM

    I hired an attorney for my BK and he would not return one call he kept forwarding e mails from my credit union on the relief of stay, I had no idea what it was and he refused to explain it to me. He said it was an extra cost not included. Even to explain ? Then I got a motion to appear in court for this matter which was to keep my car. I did not respond because for one the date was wrong it said jan. instead of June and second I didn’t agree. I did go to court and I wasn’t on the docket the next day I got a letter signed by judge granting their relief and stating to repossess my car. I was current. They claim I owed fees of $28.00 and when I tried to pay that before court they locked my account. I’m a full time student and my hours were cut at work. I am trying so hard and I can’t lose my car or I can’t get to college or work and lose everything I’ve worked for for 4 years. What can I do? Will they really take it even if I’m current?

    • Robert Weed

      June 20, 2013, pm30 5:40 PM


      Wow–what a story. You definitely don’t want a lawyer like that. You might want to post a comment in Google. And maybe even complain to the state bar in your state.

      Don’t know where you are–the only national company that picks up cars after bankrutpcy when the payment is current that I know of is Ford Credit. I’ve also seen that from Alaska Credit Union (I’m in Virginia so I don’t see them much) and Suncoast Credit Union from Florida. Suntrust used to but told me they’ve stopped.

      But you need to get current–so contact them and pay that $28.00–and pay on the dot or earlier from now on–they won’t warn you if you are late, they will just come and get the car. Also, you probalby don’t, but if you have a locking garage, keep the car locked up at night.

  • heather ham

    August 21, 2013, pm31 5:36 PM

    We have filed chapter 7 bankruptcy. The auto stay was lifted and we moved from our home. We do not want to keep the property but the lender ocwen is trying to get us to do a inhouse modification. My question is even if they forclose do we pay whats left?The bankruptcy should be discharged soon. Do I just let them do their thing? We do not want the property.

    • Robert Weed

      August 21, 2013, pm31 7:19 PM


      The reason you file bankrutpcy is so they CANNOT come after you after the foreclosure. So you don’t need to worry about that. If there’s an HOA make sure you keep paying them. Ocwen is sometimes really slow to foreclose.

  • Sonja

    May 29, 2014, pm31 11:32 PM

    I filed Chapter 13 about a year ago and the bancuptcy attorney takes out a nice amount of money from my paychecks each pay period to pay off my creditors which also includes a fee for him as well. I have recently fallen short on paying my mortage and I am now 2-3 months behind. I called my Mortage Company and asked them last month and the month prior to provide me with documentation for a Loan Modification and they said they send this info out to my attorneys, however I have not heard from my attorney, I also asked if I was in risk of loosing my home because of me being behind and they said no, besides thier is nothing that they can do to me because I filed bankruptcy (I spoke with someone in the bankruptcy dept at my Mortage Co). Nonethless I called them to tell them that I was sending a payment and they said to discuss this with my Bancruptcy Atty because they put in a motion to discharge my bankruptcy. I sent in a payment anyways and left several messages with my atty but recieved no calls… Can the Mortage Co take my home??

    • Robert Weed

      May 30, 2014, pm31 2:54 PM


      Yep, you are in a mess. You definitely need a lawyer to try to work out a catch up agreement with the mortgage company. Around here the bankruptcy judges absolutely think that’s part of your bankruptcy lawyer’s job. You need to make sure your lawyer clues in NOW!

  • Deborah lewis

    July 28, 2014, pm31 5:59 PM

    Can an attorney file a motion for a relief from stay and present to count court while the stay is in place?

    • Robert Weed

      July 28, 2014, pm31 7:29 PM



  • Pat

    January 26, 2017, pm31 2:25 PM

    I wanted to know what happens if you havent received any court hearing stating they filed a motion

    • Robert Weed

      January 26, 2017, pm31 2:39 PM


      Probably NOTHING happens, BUT I sure don’t KNOW they haven’t filed a motion; I don’t KNOW who they are; or whether you moved and didn’t update your address. Or a lot of things. What does your lawyer say?

  • Joy

    February 20, 2018, am28 5:20 AM

    I’m in chapter 13 and fell behind on payments for a few months, however I recently paid the arrears in total but before my last payment went through they sent a court document for relief of stay. I have a future court date will they allow me to keep my home as I continue to make on time payments from here on out? (At this point I have no arrears) but the motion was filed. California. I WANT TO KEEP MY HOME

    • Robert Weed

      February 20, 2018, am28 10:26 AM


      It looks to me like you need to go to court and prove that you are now current. But what does your lawyer say?

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