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 legal notice that is filed in court by the debtor (the person filing for bankruptcy). This motion essentially requests a pause in the collection actions of creditors, allowing the debtor more time to develop the repayment plan that will be presented to the court. The automatic stay is a legal protection that is granted to the debtor once the bankruptcy petition has been filed. This protection prevents creditors from attempting to collect on the debt, including the pursuit of foreclosure or repossession. It also prevents or stops wage garnishments, utility shut-offs, and other debt collection activities. The automatic stay is typically granted for a set period of time that is determined by the court. For a Chapter 11 bankruptcy, that period is usually 3-4 months; however, a debtor can file a motion to extend the automatic stay. This motion asks the court to extend the period of time that creditors cannot pursue the debt, giving the debtor more time to develop a repayment plan. In order for the court to approve a motion to extend the automatic stay, the debtor must be able to demonstrate that they are actively and diligently working on the repayment plan that will be presented to the court. The court may also require that the debtor posts a bond or other security to make sure that the creditors’ interests are protected. If the motion is granted, the extended period of the automatic stay will be granted and the creditors will not be able to take any action against the debtor until the repayment plan is approved.

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

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