Can a Creditor Remove the “Automatic Stay” in Bankruptcy in New York City?

The “automatic stay” in bankruptcy goes into effect the moment you file and will prevent any creditor action against you, but it is not a guarantee. A creditor can ask the bankruptcy court in New York City to remove, or lift, the automatic stay making you liable for the uncollected debt once again. If they are successful in lifting the stay your creditor will undoubtedly come after you with everything they’ve got, but if you’re working with a qualified attorney you shouldn’t have any problem.

Any debts you have going into your bankruptcy are immediately suspended by the automatic stay, but a creditor can file a motion to lift the stay for a particular debt. These motions are not as common as most of our clients would believe. The automatic stay and bankruptcy protection is very powerful and creditors need to be very careful in filing these motions to avoid violating your court ordered protections. If a creditor moves forward and decides to file a motion to lift the “automatic stay”, you are entitled to a hearing where the creditor must show the court a very good reason to lift the stay. Lifting the “automatic stay” simply because you owe your creditors and can’t pay them back is not a reason to lift the stay. The bankruptcy laws are on your side and the court is inclined to go with the debtor in these hearings under almost all circumstances.

Now when it comes to secured debt like a mortgage payment your creditor will have more success in lifting the automatic stay. If you’re not making your house payment a mortgage lender will motion to have the automatic stay lifted so they can continue with the foreclosure proceedings. Fortunately bankruptcy has other mechanisms for protecting secured assets that might not be permanently protected by the “automatic stay.” Chapter 13 bankruptcy for example will allow you to catch up on mortgage arrears in a repayment plan that will prevent foreclosure even though the debt will not be protected by the stay.

Bankruptcy will eliminate the vast majority if not all of your unsecured debt leaving you more money each month to address any debts that may not be protected by the “automatic stay.” If you live in New York City contact the Law Offices of William Waldner online or at 212.244.2882 to arrange a free consultation today. We only practice bankruptcy law and maintain a 99% Chapter 7 bankruptcy discharge record in New York City as of 8/31/16.

**** DISCLAIMER: This article is intended for educational purposes only. By reading no attorney-client relationship has been created. Prior results do not guarantee a similar result for future clients.