The automatic stay is a court order that takes effect immediately when you file bankruptcy. It stops most collection actions, lawsuits, foreclosures, repossessions, wage garnishments, and creditor harassment. It remains in effect until the case is closed or the debt is discharged.
Three Grounds for Relief
Section 1301(c) allows creditors to seek relief on three grounds: (1) the codebtor received the consideration, (2) the plan does not propose to pay the claim, (3) the creditor would be irreparably harmed.
The creditor must file a motion. The court holds a hearing within 20 days. The burden of proof is on the creditor.
Protecting Against Relief
The best defense is a plan that pays the codebtor claim in full. If the plan provides 100% payment, the creditor has no basis for relief.
Even if the plan pays less than 100%, you can argue that modification is possible or that the codebtor did not receive the consideration.
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