WHAT IS A MOTION FOR RELIEF?
A motion for relief is a creditor’s way to ask the court for permission to foreclose on a house or repossess a car.
In most cases, only a mortgage lender or a car lender can bring a motion for relief. The court usually hears the motion approximately one month after the creditor files the motion.
The judge generally grants the motion on the hearing date, which allows the creditor to restart the foreclosure process, or repossess the car.
WHEN AND WHY DO CREDITOR’S MAKE MOTIONS FOR RELIEF?
The most common reason for a creditor to make a motion for relief is that the debtor has filed bankruptcy and does not want to use the bankruptcy to keep a house or car.
The bankruptcy petition tells creditors which property with secured loans against it, such as car loans and mortgages, the debtor wants to pay for and keep, and which ones the debtor wants to surrender and discharge.
If you want to keep a piece of property with a secured loan against it, then you must keep paying the loan. If you continue making the normal payments, the creditor won’t make a motion for relief, and won’t foreclose or repossess.
If the debtor isn’t making payments on one of the loans, then the creditor might decide to make a motion for relief. The benefit of this motion to the creditor is that the creditor can take back the collateral (the house or the car) more quickly than just waiting for the bankruptcy to end.
Since a Chapter 7 Bankruptcy only takes three months, the motion only gives the creditor two extra months in a Chapter 7 (the motion takes one month to resolve), but a Chapter 13 Bankruptcy can take up to 5 years.
Most secured lenders in Chapter 7 don’t file motions for relief, they usually prefer to wait the three months and foreclose or repossess after the bankruptcy case is discharged.
This is because there are additional attorney’s fees and complications to filing these motions, and foreclosing 2 months sooner is generally not worth very much to the creditor.
WHAT SHOULD I DO IF ONE OF MY CREDITORS MAKES A MOTION FOR RELIEF?
The first thing to do is to think about whether you want to keep the collateral (the house or the car). If you want to surrender the house or car, then you don’t need to do anything.
The creditor will win the motion by default and the court will give them permission to start foreclosure or repossession. In the case of a foreclosure, you still get the 6-weeks notice before a sheriff’s sale and the 6-month redemption period after the sheriff’s sale.
In the case of a car repossession, the creditor can send the repo man to take the car as soon as the judge grants the motion for relief.
If you want to keep the collateral, then you should talk with your attorney about catching up on the loan payments, and possibly making a payment arrangement.
Creditors don’t want to foreclose on your property, they are not in the business of selling houses and cars, they would prefer that you make the normal payments and keep the property.
If a creditor files a motion for relief when you are current on the loan, then you should contact your attorney immediately, because the creditor might have made a mistake.
If you need help to decide whether to file Chapter 7 bankruptcy or Chapter 13 bankruptcy in Minnesota, call us at 612-824-4357. The call is free, and it may turn your life around.