Legal Definitions - motion for relief from stay

A motion for relief from stay is a formal request filed with a bankruptcy court by a creditor or another interested party. When an individual or business files for bankruptcy, a legal protection known as the "automatic stay" immediately goes into effect. This stay temporarily halts most collection actions against the debtor or their property, such as lawsuits, foreclosures, repossessions, and wage garnishments.

A party files a motion for relief from stay to ask the bankruptcy court to remove or modify this automatic protection specifically for their situation. This allows them to proceed with a particular action that would otherwise be prohibited by the stay, often because they believe their legal rights or financial interests are not adequately protected while the stay is in place.

• Example 1: Mortgage Lender Seeking Foreclosure

  Imagine a homeowner files for Chapter 7 bankruptcy after falling several months behind on their mortgage payments. The automatic stay immediately prevents the mortgage lender from continuing with any foreclosure proceedings. To regain the ability to foreclose on the property and recover their debt, the mortgage lender would file a motion for relief from stay with the bankruptcy court. They would argue that their financial interest in the property is not adequately protected because the debtor is not making payments, and the property might be losing value. If the court grants the motion, the lender can then proceed with the foreclosure process according to state law, despite the ongoing bankruptcy case.

• Example 2: Car Lender Seeking Repossession

  Consider a situation where an individual files for Chapter 13 bankruptcy, but they have stopped making payments on their car loan. The car serves as collateral for the loan, and the lender is concerned that the vehicle's value is depreciating quickly, putting their loan at risk. The car lender would file a motion for relief from stay. They would present evidence to the court demonstrating that their security interest in the car is not adequately protected due to non-payment and depreciation. They would ask the court to lift the stay specifically to allow them to repossess the vehicle. If the motion is approved, the lender can then legally take possession of the car.

• Example 3: Landlord Seeking Eviction

  Suppose a tenant files for Chapter 7 bankruptcy after receiving a court order for eviction due to unpaid rent. The automatic stay prevents the landlord from continuing with the eviction process, even if the state court had already ruled in their favor. The landlord would file a motion for relief from stay with the bankruptcy court. They would argue that they have a right to regain possession of their property and that the tenant's bankruptcy should not indefinitely prevent them from doing so. If the court grants the motion, the landlord can then proceed with the eviction lawsuit in state court, allowing them to remove the tenant and re-rent the property.