What are the grounds for relief from stay?

Section 362(d) provides four grounds: (1) 'for cause, including the lack of adequate protection' -- the creditor's collateral is declining in value without protection; (2) the debtor has no equity in the property AND the property is not necessary for an effective reorganization; (3) in single-asset real estate cases, the debtor has not filed a plan or begun making payments within 90 days; (4) the debtor's filing was part of a scheme to delay and the property was transferred from another entity with a pending bankruptcy.

How do I oppose a motion for relief from stay?

File a written response within the deadline set by local rules (often 14-21 days). Show that you are providing adequate protection (making payments, maintaining insurance), that you have equity in the property, or that the property is necessary for your reorganization. Attend the hearing and present evidence. If you are in Chapter 13, show that your plan addresses the creditor's claim.

What happens if the court grants relief from stay?

If the court grants the motion, the creditor can proceed with collection or enforcement as if no bankruptcy had been filed -- but only for the specific property or debt covered by the order. The rest of the automatic stay remains in effect for other creditors. In practice, this often means the mortgage lender can resume foreclosure or the car lender can repossess the vehicle.

Motion for Relief from Stay -- When Creditors Ask the Court to Lift the Stay

Q: What is a motion for relief from stay?

A motion for relief from stay is a request by a creditor asking the bankruptcy court to lift (terminate) the automatic stay so the creditor can pursue collection or enforcement against the debtor or the debtor's property. It is filed under Section 362(d) of the Bankruptcy Code. Common examples include a mortgage lender seeking to foreclose or a car lender seeking to repossess.

What is a motion for relief from stay?

A motion for relief from stay is a formal request by a creditor asking the bankruptcy court to lift the automatic stay so the creditor can proceed with collection or enforcement against you or your property.

Relief from stay is the most common contested motion in bankruptcy court. If you have a car loan, a mortgage, or any secured debt, there is a good chance a creditor will file one during your case.

If the court grants the motion, that specific creditor can proceed as if no bankruptcy had been filed -- but only for the property or debt covered by the order. The stay remains in effect for everything else.

The four grounds: Section 362(d)

362(d)(1) -- "For cause, including the lack of adequate protection"

The most common ground. "Cause" is intentionally broad and undefined. The most frequent basis is lack of adequate protection -- the creditor's collateral is losing value, and the debtor is not compensating for that loss.

Examples:

A car is depreciating and the debtor is not making payments
A house is uninsured or falling into disrepair
The debtor has no plan to pay the secured creditor
Equipment is being used and wearing out without payment

Adequate protection can take several forms: periodic cash payments to the creditor, an additional or replacement lien, or other relief that gives the creditor the "indubitable equivalent" of its interest in the property.

362(d)(2) -- No equity AND not necessary for reorganization

The creditor must prove both elements:

The debtor has no equity in the property (the debt exceeds the value), AND
The property is not necessary for an effective reorganization (Chapter 11/13) or is not necessary for the debtor (Chapter 7)

If the debtor has even a small amount of equity, this ground fails. If the property is necessary for the debtor's reorganization (e.g., the debtor's only car needed to get to work), this ground also fails even if there is no equity.

362(d)(3) -- Single-asset real estate

In a "single asset real estate" case (typically an entity that owns one piece of real property), the court must grant relief unless the debtor has filed a plan with a reasonable possibility of being confirmed, or has begun making interest payments to the creditor, within 90 days of the filing or within 30 days after the court determines the case is a single asset real estate case.

362(d)(4) -- Scheme to delay

The court must grant relief if it finds the filing is part of a scheme to delay, hinder, or defraud creditors that involved the transfer of the property without the secured creditor's consent. This typically arises when property is transferred between entities that file successive bankruptcies.

What happens at the hearing

The court must act on a motion for relief from stay within 30 days under Section 362(e). If the court does not rule within 30 days after the motion is requested, the stay is automatically terminated as to the movant.

The timeline

Creditor files the motion and serves it on the debtor and trustee
Debtor has a deadline to respond -- typically 14-21 days under local rules
Hearing is held -- the court hears arguments and evidence from both sides
Court rules -- grants the motion, denies it, or continues the stay with conditions (such as requiring the debtor to make adequate protection payments)

Burden of proof

Under Section 362(g):

-- The creditor has the burden of proof on the issue of the debtor's equity in the property

-- The debtor has the burden of proof on all other issues

This means the debtor must prove adequate protection, that the property is necessary for reorganization, and good faith.

How to oppose a motion for relief from stay

If you are in Chapter 13

Show your plan addresses the debt. If your plan provides for current payments plus cure of the arrearage, that is usually adequate protection
Be current on plan payments. A debtor who is behind on plan payments has a much harder time opposing relief from stay
Maintain insurance. An uninsured vehicle or uninsured home is a strong basis for relief
Show the property is necessary. Your car gets you to work. Your home is where you live. These are necessary for reorganization.

If you are in Chapter 7

Chapter 7 does not involve a reorganization plan, so the "necessary for reorganization" prong is harder to argue
If you want to keep the property, showing equity helps
In practice, many Chapter 7 debtors negotiate a reaffirmation agreement rather than opposing the motion

Practical steps

File a written response within the deadline. Silence is treated as consent in many courts.
Gather evidence: proof of insurance, payment history, property valuation, evidence of your plan's feasibility
Attend the hearing. If you do not appear, the court will likely grant the motion by default.
Offer adequate protection. Even if you are behind, offering to make current payments going forward (plus a catch-up amount) can defeat the motion.

Conditional orders and agreed orders

Many relief from stay motions are resolved by agreement. Common outcomes:

Agreed order: The debtor agrees to make specific payments on a schedule, and the stay remains in effect as long as the debtor complies. If the debtor defaults, the stay lifts automatically.
Conditional order: The court continues the stay but imposes conditions -- adequate protection payments, proof of insurance, or a deadline to file a plan.
Drop-dead order: The stay continues but terminates automatically on a specific date or upon a specific default, without further motion or hearing.

Be careful with agreed orders. If you agree to terms you cannot meet, the stay will lift automatically when you default, and you will not get a second hearing. Only agree to terms you can realistically honor.

In rem relief: 362(d)(4)

When the court grants relief under 362(d)(4) based on a scheme to delay involving property transfers, the court can enter an order that is binding in rem -- meaning it attaches to the property, not just the debtor. This prevents any subsequent debtor from getting the benefit of the stay on that property for two years.

This is an aggressive tool used against serial filing schemes where property is transferred between entities (or between spouses) to trigger successive stays.