How long is Automatic Stay in effect?
It lasts from the filing date up to the discharge date, or the day the case is formally closed, whichever comes first.
Why would the court not close the case after discharging it?
“Whichever comes first,” means, assuming that the case has been discharged, but the trustee is still waiting for the consumer’s tax refund or a future inheritance, it would not be closed because the trustee’s job is to collect from the consumer to pay the creditors.
Is the automatic stay still in effect after the discharge?
It is, as long as the creditors have not filed the Motion to Lift Stay, but more often than not, they are going to petition for it, in order to start collecting from the consumer again, at least until the debts are satisfied. The court then would set a hearing and send the consumer a notice. A certain period of time would be given to the consumer to file a response, but in some districts, even if the consumer decides not to file a response, he/she can still appear in court to argue against the lifting of the stay.
What happens if the consumer fails to attend the hearing?
If for example, the consumer did file a written response, but failed to attend the hearing, the court would favor the creditors and lift the stay. Unless doing so would affect other creditors
What are the grounds for lifting the stay?
• If the request is not a legitimate concern of the bankruptcy court. The court’s main or legal concern is the circumstances surrounding the consumer’s finances. A child custody case is an example of a case that the bankruptcy court has no jurisdiction over.
• If the stay is harming the creditors’ interest in a property. As in the case of car repossessions. The car’s value depreciates with time. If the consumer has stopped his/her payment, the court would favor the creditors’ request.
• If the consumer does not have ownership interest on the property that the creditor is asking for.
What is ownership interest?
It is a legal claim on a property. Simply put, the consumer has ownership interest if he/she would get cash out of the sale of the property.
Examples of consumers with ownership interest:
• Holders of rights (not title holders) on a land that is under a lease. Even if the landlord would like to evict the consumer and have asked the court to lift the stay, the court’s decision on whether to lift the stay or not depends on the contract’s expiration date.
• Insurance holders. If the contract is live or has not yet expired, the court would not lift the stay, and the consumer would enjoy continued coverage even if he/she has stopped payment. Not unless the contract specifies that once the payment stops, so would the coverage.
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