Chapter 13 Bankruptcy Gives Delinquent Debtor A Second Chance

In a recent Chapter 13 bankruptcy, the debtor was faced with losing their case after failing to make payments to the creditor and trustee and failing to maintain their real estate property.

In the instant motion, Movant seeks relief from stay in order to foreclose. Movant asserts that Debtor’s failure to make payments constitutes cause for relief from stay. Movant also asserts that Debtor has failed to adequately maintain the property, and that that failure also constitutes cause for relief from stay.

Movant also asserts that Debtor lacks equity in the property, and the property is not necessary for an effective reorganization.

With respect to the condition of the property, Wolfswinkel testified that Movant has received letters from the homeowners’ association complaining about the condition of the property. As to each of the letters, Debtor testified that he has made the repairs requested. He testified that the only repair remaining to be done is to fix one gate. The court finds Debtor’s testimony credible on this issue.

However, the debtor’s failure to pay and provide proper maintenance on the property was due to their income issues. Now that the debtor is earning more money they are able to make timely payments, cure their delinquency and make proper repairs to the property.  The creditor in this case requested that the automatic stay be lifted so that they could foreclose on the property; but the bankruptcy court ruled that the debtor should be given a second chance.

The bankruptcy court called for the automatic stay to be conditioned on the future behavior of the debtor. If the debtor makes payments and takes other actions according to the new agreement then the creditor will not be allowed to foreclose on the property.  It’s important to note that cause for the lifting of the automatic stay is not fixed in law; but it is up to the bankruptcy court to look at all the circumstances surrounding the case before deciding to dismiss a case or lift the automatic stay.

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