Overcoming Bankruptcy’s Barrier to Creditor Collections
Although the filing of a bankruptcy petition puts an immediate stop to all forms of debt collection activity in all but a very few situations, creditors holding different kinds of claims can ask the judge for relief from the automatic stay — in other words, permission to commence or continue litigation or asset recovery actions against the debtor.
To learn whether your claim is a good candidate for relief from the automatic stay, discuss your situation with an experienced Massachusetts bankruptcy lawyer. Contact the Boston law firm of Gannett & Associates for a free consultation.
Call (617) 367-0606 for advice about relief from the automatic stay
The most common situation justifying relief from bankruptcy’s stay involves the right of a secured creditor to proceed against collateral. If the debtor has little or no equity in the real estate or personal property that secures a claim, then the bankruptcy court will generally allow foreclosure or repossession and liquidation efforts to go forward.
The main issues in a contested motion for relief from the automatic stay usually concern asset valuations, debt balances and the debtor’s practical ability to protect the secured creditor’s position while the automatic stay remains in effect. Our law firm’s ability to present the case for relief on these issues can give you a significant advantage in automatic stay litigation.
Relief from the automatic stay might also be necessary to protect the rights of unsecured creditors in situations where fraud on the part of the debtor is an issue raised in state or federal litigation interrupted by the bankruptcy petition. Because factual determinations on fraud issues will affect how the underlying debt is discharged, a bankruptcy judge will often allow the civil litigation to proceed as a more efficient way to resolve these issues.
A secured or unsecured creditor might also need relief from the stay in order to prove liability against the debtor on a contested claim, determine the amount of a claim when the correct balance is in sharp dispute, or continue litigation that combines a creditor’s allegations against a debtor with counterclaims or offsets against the creditor.
We can also advise you about situations when the automatic stay doesn’t apply or has only limited effect, such as repeat bankruptcy filings by the same debtor within a year. For the advice of an attorney experienced with the full range of automatic stay issues in bankruptcy, contact Gannett & Associates in Boston for a free consultation.