What is a Lift Stay Motion in Bankruptcy Law?

 Posted on January 31,2024 in Debt Collection

In the complex and ever-changing world of bankruptcy law, a lift stay motion is a legal mechanism used by creditors to request the court’s permission to continue or initiate collection actions against an Illinois debtor despite the automatic stay typically imposed for filing for bankruptcy. If you are approaching the daunting task of going through bankruptcy and wish to legally safeguard yourself in every way possible, hire a lawyer as your first step toward successfully navigating the process.

Taking a Deeper Dive into Lift Stay Motions

When a debtor files for bankruptcy, an automatic stay is immediately imposed, halting most collection actions against the debtor. However, creditors may file a lift stay motion to request the court’s permission to proceed with collection efforts. A lift stay motion is typically filed when the creditor believes the debtor’s bankruptcy filing is an abuse of the bankruptcy system or that the automatic stay unfairly prejudices the creditor’s interests. The motion must demonstrate “cause” to convince the court that lifting the stay is justified

Grounds for Filing a Lift Stay Motion

Creditors may file a lift stay motion for various reasons, including but not limited to: 

• Lack of adequate protection – If the debtor’s property is not adequately protected, such as when the value of the collateral securing a debt decreases significantly, the creditor may seek relief from the stay to protect its interests.

• Bad faith filing – If the creditor believes that the debtor filed for bankruptcy in bad faith solely to delay or frustrate the creditor’s collection efforts, they can file a lift-stay motion

• Lack of equity – If the debtor has no equity in the property securing the debt, and the creditor can demonstrate that the property is unnecessary for the debtor’s reorganization, a lift stay motion may be pursued.

The Court’s Decision

Upon receiving a lift stay motion, the court will evaluate the creditor’s arguments and the debtor’s response. The court will consider factors such as the debtor’s ability to reorganize, the interests of both the debtor and the creditor, and the potential harm caused by lifting the stay. If the court determines the creditor has demonstrated “cause” to lift the stay, it may grant the motion, allowing the creditor to proceed with collection actions against the debtor

Contact Our Chicago, IL Debt Collection Lawyer

A lift stay motion is a vital tool in bankruptcy law that allows creditors to seek relief from the automatic stay imposed upon a debtor’s bankruptcy filing. To get in touch with attorneys who are familiar with ways to help lenders recover debt, contact the skilled Chicago, IL debt collection attorney with Dimand Walinski Law Offices, P.C.. Call 312-704-0771 for a private consultation.