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 request to the court that allows the debtor to protect their assets from being collected on by creditors. This motion will temporarily stop creditors from attempting to collect their debts while the debtor is in the process of restructuring their finances. The automatic stay in Chapter 11 bankruptcy can be extended to protect the debtor from foreclosure, eviction, and wage garnishment. It also prevents debt collection attempts, calls, or letters. The automatic stay is in place to give the debtor time to restructure their financial obligations in order to become more financially stable. The motion to extend the automatic stay is meant to allow the debtor to have more time to participate in the Chapter 11 process. By filing the motion, the debtor will be given an extension of the automatic stay typically up to a period of six months. This extension could be used to reorganize, propose a repayment plan, or attempt to dismiss certain debts. The motion is filed in the bankruptcy court and must be accompanied by declarations and evidence to show the debtor is actively working to repay creditors. The debtor must explain why the automatic stay should be extended, and will typically include a detailed plan of how they will be able to get back on track financially. If the motion is approved, the automatic stay will be extended and will remain in effect while the debtor is actively working on their plan. If the motion to extend the automatic stay is denied, the debtor will have to continue with the bankruptcy process without the additional time.

Related FAQs

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

Related FAQs

Related Blog Posts