In both Chapter 7 and Chapter 13 bankruptcy, a motion for relief from stay is when a creditor (usually a bank) asks the court to lift the automatic stay that protects the debtor from foreclosure or repossession. The creditor has to give the court a reason, they can’t do it just because.
Generally speaking, the creditor will wait until the debtor goes three months in past due before they file a motion for relief from stay, but sometimes they will wait longer or file earlier, and sometimes, as I experienced this morning, their motion will be complete crap and will need to be fought appropriately.
The creditor filed their motion claiming my client was three months behind on their mortgage. They weren’t. The creditor claimed they hadn’t made payment in October, November, or December, they did.
Now generally speaking, a creditor will post a payment for the last due date. If you miss June’s payment and then pay in July, that payment will be considered the June payment and you will be past due for July.
The creditor is required to plead that in their motion and if they have not proven that in their motion, the motion should fail.
This morning was the first time the creditor provided me with a payment history proving that my client was past due.
The problem is that this leads to an additional expense to the already financially strapped bankruptcy client. The motion I defended today would have cost my client $750 if I had charged them, but since the client was a Chapter 7 client, there was no way my client was going to be able to pay this so I had to do it pro bono (this is called involuntary free work).
I already knew what the creditor was looking for even before we went to court today. If I had just rolled over and allowed the creditor to get a stipulation for my client, I wouldn’t have had to appear in court today, in fact the judge gave the creditor’s local counsel a tongue lashing for it. The creditor is fishing for a stipulation that would include their legal fees. Their legal fees were $700 + the cost of filing the motion, which was $150.
This was essentially a fishing expedition by the creditor for $700 additional dollars that they were not entitled to. It is a low risk proposition. A lot of attorneys will take the creditor’s motion at face value, but when they are dealing with me they are dealing with a former debt collector, so I don’t have the trust instinct that other bankruptcy attorneys have. It’s also a low cost investment for the cost of the motion because most of the time they will get that back in the stipulation.
This creditor filed a crap motion and today the judge gave me the option of arguing the motion and having it dismissed or continuing the hearing for two weeks and trying to resolve the matter with the creditor.
The vindictive, nasty, mean-spirited attorney in me wanted to argue the motion and have it dismissed but the more reasonable attorney in me decided to agree to continuance because now my client is bargaining in a position of strength rather than that of weakness, and that is the key to bankruptcy, controlling the situation rather than having it control you.
