During The Automatic Stay and its Effect on Foreclosure Actions, the court may grant a continuance based on the claim made by the creditor. The judge will then consider evidence presented by the party seeking relief. However, the court cannot rule on collateral claims if the debtor is not adequately protected under the stay. It may continue with the foreclosure action only if there is a reasonable chance that the debtor will obtain relief from the automatic stay.
How to Know About The Automatic Stay and Its Effect on Foreclosure Actions
Under the Bankruptcy Code, the automatic stay applies only to those co-obligors who are not filing for bankruptcy. Unlike a bankruptcy, it does not stop the lender from continuing with foreclosure if the debtor files a single-purpose bankruptcy petition. Even when a lender fails to comply with the automatic stay, he or she will face damages in addition to lost property.
When a debtor files for bankruptcy, an automatic stay can prevent creditors from collecting on debts, repossessing collateral, and taking wage garnishments. Moreover, creditors are not allowed to contact debtors to demand payment if the automatic stay is in effect. An automatic stay will be in place until the debtor’s repayment plan is completed. If a debtor files for bankruptcy, his or her creditors are not allowed to pursue further collection actions, and the bankruptcy court can lift the stay and resume foreclosure proceedings.
The automatic stay is a legal tool used by creditors to halt foreclosure. However, a bankruptcy court has the power to override the stay in some circumstances. For example, if the debtor has moved from Chapter 7 to Chapter 13 and has not paid his rent for a year, the creditor may get around the stay by showing that the debtor was unable to pay his or her rent.