After a Chapter 13 341 meeting, what happens next? There are a variety of things that can happen after a Chapter 13 341 meeting. One of those events that could happen is a creditor may bring what we call a motion for relief from the automatic stay.
Remember that once a Chapter 13 Bankruptcy is filed with the court that constitutes a court order for relief and invokes injunctive relief under Section 362 of the Bankruptcy Code. This means that if you are behind on your house or car, the creditor cannot repossess your vehicle or foreclose on your home.
If you fall behind on your vehicle or home payments after you file a Chapter 13 Bankruptcy, creditors can ask the court to remove the injunction in place under Section 362 of the Bankruptcy Code. Section 362(d) of the Bankruptcy Code governs creditor’s requests to terminate the automatic stay. The creditor must prove certain requirements before the court will grant a creditor’s relief from the automatic stay.
For example, if debtor has abandoned creditor’s collateral or the collateral is in jeopardy of losing value if not recaptured as soon as possible, courts will likely grant the relief from the stay. It is not uncommon for debtors to go into Chapter 13 Bankruptcy planning on surrendering certain vehicles or homes etc. While the plans will sometimes state that the automatic stay terminates upon confirmation of the plan with respect to collateral debtor will surrender, creditors may not always want to wait that long.
If a motion for relief is brought on collateral you want to retain, your lawyer will either need to contest the motion for relief or make a deal with the creditor to resolve the motion for relief. Once relief is granted, the creditor can then pursue their state court remedies including repossession and foreclosure.
