Relief from Automatic Stay

Category: legal

An order granted by a bankruptcy judge allowing a creditor to proceed with collection or foreclosure actions despite the bankruptcy filing.

Relief is the "hall pass." If a debtor files for bankruptcy but stops making post-petition mortgage payments, the bank can ask the judge to lift the shield. If granted, the bank can foreclose on the property as if the bankruptcy didn’t exist.

Common Examples

• The mortgage lender filed a motion for relief from stay after the debtor failed to make any house payments for six consecutive months.
• Proving that the debtor has no equity in the property and that the asset isn’t necessary for a reorganization is the standard way to win a relief from stay.