As soon as you filed for bankruptcy, the court protected you from just about all types of collection efforts. This protection is called the “automatic stay.” While the automatic stay is protecting you, secured creditors cannot repossess property that they have sold you. You already know that to keep secured property in bankruptcy you need to stay current on the secured loans. If you fall behind, the creditor can ask the court to allow it to repossess the collateral. This request is called a Motion for Relief from the Automatic Stay. If the motion is granted, the creditor can continue taking the steps to repossess its collateral. It also allows the creditor to work directly with you on loss mitigation and mortgage modification without requiring court approval. Just as important as what the Motion means is what it doesn’t mean. The creditor CANNOT collect any debts from you after the repo/foreclosure. The creditor CANNOT communicate directly with you without our permission. The creditor CANNOT foreclose faster than it could outside of bankruptcy.
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