What is a “motion to extend the automatic stay” in a Chapter 11 bankruptcy?

A motion to extend the automatic stay in a Chapter 11 bankruptcy is a request to the court to extend the amount of time that creditors are legally prevented from taking any action to collect debts from the debtor. In Arizona, an automatic stay is an injunction placed on creditors when a debtor files for bankruptcy. This injunction prevents creditors from taking any action to collect outstanding debts, such as foreclosing on property or garnishing wages. A motion to extend the stay is simply an application to the court to extend that stay beyond the statutory period of time. When a motion to extend the stay is filed, the debtor must be prepared to show the court that they have good cause for requesting the extension. This could be due to the debtor needing additional time to come up with a repayment plan or other relief. Generally, extensions are granted if the debtor can prove that any financial suffering caused to creditors by the extension is outweighed by the benefit of allowing the debtor a chance to reorganize their finances. In Arizona, the court has the ability to grant an extension of up to 18 months, depending on the circumstances. To be clear, an extension of the automatic stay is not a guarantee that the debtor will be successful in their bankruptcy proceedings, but it does provide them with an opportunity to reorganize their finances and attempt to pay back their creditors.

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What is a “motion to extend the automatic stay” in a Chapter 11 bankruptcy?

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