The court will ordinarily grant relief from the automatic stay to a secured creditor if the debtor is in default at the time of the bankruptcy hearing, regardless of whether the collateral for the debt is a car or the debtor’s house. However, if cause is shown by the debtor to delay granting relief until the discharge is granted and if the creditor is adequately protected–usually by equity in the property–the court may permit the stay to continue until it expires by operation of law. The court considers the stay to expire in a chapter 7 case 60 days after the first date set for the meeting of creditors as long as no complaint is filed seeking denial of the debtor’s discharge regardless of whether the clerk has actually entered the debtor’s discharge and/or given notice of the discharge to the debtor and creditors.

If the motion is by a property owner seeking to evict a debtor who is either a holdover former owner of property upon which a secured creditor has foreclosed or a renter under either an expired or terminated lease or under a month to month rental agreement, the court will ordinarily grant relief. If the bankruptcy petition was filed after an unlawful detainer judgment was obtained or there have been successive bankruptcies, the court will permit the motion to be placed on the next relief from stay calendar without the need for an application for an order shortening time.

1. If the debtor was not in default of his or her obligations at the time the motion was filed, unless the debtor has filed the bankruptcy case in bad faith, the motion will be denied, and the debtor may be awarded attorneys’ fees against the creditor.

2. If the debtor was in default of his or her obligations at the time the motion was filed, the court may or may not grant the creditor an adequate protection order. Whether the court will grant such an order will depend primarily on whether there is any substantial equity in the property and whether the debtor has defaulted and cured the default previously, either in this case or in previous cases. In any event, if there is equity in the property, the creditor will be entitled to add its attorneys’ fees for bringing the motion to its proof of claim.

3. If the debtor is in default at the time of the hearing and wishes the automatic stay to remain in place, the debtor will be expected to make a specific proposal for prompt cure of the default. The proposal should provide for a cure within the shortest time feasible based on the debtor’s cash flow. The Court will rarely permit a cure that exceeds six months. The primary reason that the court might permit a longer cure is if the debtor has substantial equity in the property to protect the creditor.

4. Adequate protection orders

a. The most common form of adequate protection order provides for the debtor:

i. to pay specified amounts on specified dates to cure the post-petition defaults;

ii. to pay current payments when they come due or within any contractual grace period; and

iii. to comply with other contractual obligations, e.g., payment of real property taxes, maintenance of insurance, payment of senior debt.

b. The most common form of adequate protection order also provides that, if there is a further default in any of these obligations, the creditor may give the debtor written notice of the amount of the delinquency and that the debtor has 10 days to cure it. The order should further advise the debtor that, if the default is not cured within the 10 days, the creditor will be entitled to submit evidence of the delinquency notice and a declaration stating that the debtor has failed to cure the delinquency. Upon the submission of these documents, the creditor will be entitled to relief from stay without further notice or hearing.

c. If the moving party holds a junior lien, the order will usually permit the moving party to obtain relief from stay automatically if the senior secured creditor gets relief.

1. If the court grants a creditor’s relief from stay motion and there are indicia that indicate that the case was a bad faith filing, the court will sign an order that includes a provision barring future filings by the debtors within 180 days.

2. Typical indicia that the filing of the bankruptcy was in bad faith are that it was preceded by one or more previous bankruptcies in which the debtor defaulted in his or her obligations post-petition.

3. If there are indicia of bad faith, the court will grant an order purporting to bind any party who acquires an interest in real property after a copy of the order has been recorded in the county in which the real property is located

C. Landlords and purchasers at foreclosure sales

If the motion is by a property owner seeking to evict a debtor who is either a holdover former owner of property upon which a secured creditor has foreclosed or a renter under either an expired or terminated lease or under a month to month rental agreement, the court will ordinarily grant relief. If the bankruptcy petition was filed after an unlawful detainer judgment was obtained or there have been successive bankruptcies, the court will permit the motion to be placed on the next relief from stay calendar without the need for an application for an order shortening time.