A secured creditor is one who has a lien on, or interests in, property owned wholly or partially by the debtor. When the debtor files a bankruptcy case, the automatic stay immediately goes into effect. The stay prohibits creditors from any collection activity against the debtor or the property of the debtor’s estate. In other words, creditors cannot enforce their lien rights in the property while the automatic stay is in place.
If a creditor wishes to proceed with enforcing lien rights, the creditor may file a motion for relief from the automatic stay. This type of motion typically requests that the court lift the stay as to the creditor’s specific collateral because the debtor has failed to meet certain requirements, such as remaining current on loan payments or maintaining adequate insurance on the property.
A creditor may also be allowed to proceed with enforcing its lien rights against property when it is no longer property of the debtor’s estate. This occurs when the trustee abandons the property during the bankruptcy case or by operation of law when the case has been fully administered and the property is deemed abandoned.
If you are a secured creditor interested in learning more about your rights in a bankrupt debtor’s property, contact Windtberg & Zdancewicz, PLC today!
The attorneys at Windtberg & Zdancewicz, PLC, provide clients with experienced legal representation. We are experienced in creditor’s rights and creditor’s issues in bankruptcy cases. If you need assistance, or are interested in learning more, please contact us at (480) 584-5660.