A motion is a request to the Court made by one party to obtain an order or ruling on said request. One of the most important criteria one should look at when hiring a bankruptcy attorney is to make sure that said attorney not only understands how to file the bankruptcy case for you, but more importantly that the attorney possesses the legal intellect of each motion that will need to be filed or defended against in your case to ensure your maximum benefit. If a particular motion is not timely filed or properly defended, this could prove to be tragic for your case.
Although the majority of Chapter 7 cases will not require any motion work to be filed on your behalf, there are still motions that are regularly filed in Chapter 7 cases by creditors that you need to completely understand the ramifications of. Moreover, the majority of Chapter 13 cases will require several motions that are either filed on behalf of the debtor or are filed on behalf of a creditor or trustee and need to be defended by the debtor.
Below we will provide a brief description of important motions that are common in bankruptcy cases filed in the Eastern District of California.
Motion to Confirm or Motion to Modify
Upon filing for relief under Chapter 13, one of the documents that the debtor must file is his/her Chapter 13 Plan. The Chapter 13 Plan is the document that lays out what the debtor will be paying to each creditor in his/her case during his/her 3 to 5 year repayment plan. The creditors are separated out into distinct categories and based on that designation, each creditor is required to be paid a certain amount through the plan.
After the plan has been filed, if the Court doesn’t serve the plan to all the creditors in your case, you would be required to file and serve a copy of the Chapter 13 plan to all of the creditors in your case. Along with that, you would also be required to file and serve a Motion to Confirm that Chapter 13 Plan. Through that Motion, you would have to lay out the statutory requirements that are required to be met in order for that plan to be confirmed. Moreover, this would require a Court hearing where you would argue in front of the Judge as to why your plan should be confirmed.
Moreover, if anything changes financially during the life of your Chapter 13 case, you might need to modify that plan in order to continue abiding by the bankruptcy code. For example, if your income severely increases or decreases after year one, you would want to inform your attorney and look into modifying that plan to work with your new income. To do this, you would need to file and serve a Motion to Modify your Chapter 13 Plan and again, argue in front of the Judge as to why this modification is necessary.
Motion to Value
There are several different reasons one would want to file a Motion to Value in his/her Chapter 13 case, each one allowing the debtor to save a great deal of money. A Motion to Value is a request to the Court asking that the Judge determine the value of a certain asset (i.e. home). Once the value has been established, the creditor is under a legal obligation to abide by that court order and follow the rules established.
The most commonly used Motion to Value is to determine the value of your primary residence. The reason you would want to do this is to force any junior lien holder (i.e. second mortgage) to reconvey their lien. Over time, this has been commonly referred to as “stripping” your second mortgage. How this works is that through the Motion, you need to prove to the Court that the fair market value of your home is less than the amount owed on a senior mortgage (i.e. your first mortgage). If granted, the creditor would be required to reconvey that lien and the amount owed would be treated as a general unsecured debt.
Moreover, some debtors file Motions to Value for their vehicle. Here, the Motion would be establishing the value of your vehicle in hopes of “cramming down” the amount owed. Through the Motion, you would be requesting the Court establish the fair market replacement value of said vehicle. If that value is less than the amount owed on said vehicle, the secured liability is lowered to the replacement value of the vehicle and the remainder is treated as a general unsecured debt.
Finally, debtors can also “cram down” the amount owed on personal property (i.e. furniture, electronics, etc.). Same as above, the debtor would attempt to establish the fair market value of said asset and if granted by the Judge, the amount owed on the asset would be reduced to that established value.
As you can see, motions to value can save a Chapter 13 debtor an incredible amount of money. Understanding these particular motions could be the difference between being required to pay back that $150,000.00 second mortgage or discharging your personal obligation and getting rid of the lien.
Motion to Avoid Lien
When a creditor doesn’t get paid, they have the ability to sue the debtor for the amount owed. Assuming they win that lawsuit and are still unable to collect on that debt, they will sometimes file a judgment lien on the debtor’s real property. Simply put, that lien is now attached to the real property and must be accounted for in any sale of the property. In Chapter 13, a Debtor has the ability to avoid that lien through a Motion to Avoid Lien. The Debtor would need to prove to the Court through the Motion and any oral arguments that follow that there is no equity in the property to support the judicial lien because the fixing of the judicial lien impairs the debtor’s exemption of the real property.
Motion to Incur Debt
A Motion to Incur Debt is something that that comes up during the life of your Chapter 13 case. While in Chapter 13, you generally need the Court’s permission before you incur any new debt. So, if you plan on financing a vehicle, applying for a loan modification, attempting to refinance your home, etc., during the 3 to 5 year span you are in your Chapter 13 case, this motion will allow you to do that.
Motion for Relief from Automatic Stay
This is a Motion that is used by creditors, not debtors. A creditor that files a Motion for Relief from Automatic Stay is asking the Court to lift the protection of the bankruptcy that is afforded to a debtor upon the filing of the case and allow the creditor to pursue their non-bankruptcy rights once the motion is granted. The two main reasons a creditor would do this is so they can either foreclose on your home or repossess your vehicle. Knowing your rights is crucial and could be the difference between you saving your home or not.
Motion to Extend Automatic Stay
If a debtor has had 1 previous bankruptcy case pending within 1 year of the current case, the automatic stay provided to the debtor is only valid for 30 days from the filing date. However, a debtor is able to extend the automatic stay if they can prove to the Court that the current case was filed in good faith and how the current case will succeed.
Motion to Initiate Automatic Stay
If a debtor has had 2 previous bankruptcy cases pending within 1 year of the current case, the automatic stay provided to the debtor does not go into effect upon the filing of the latter case. Similar to the Motion to Extend Automatic Stay, here you would make a request to the Court that they should initiate the automatic stay in your current case.
Objection to Claim
As part of the required documents needed to be filed in your bankruptcy case, a debtor must file a list of all of the creditors that he/she owes money to. However, payment (if any) to these creditors hinges on the creditor filing a proof of claim in your case. What if the creditor files a proof of claim stating you owe them $20,000.00 when in fact you only owe them $8,000.00? What if the creditor files a proof of claim stating your credit card debt owed to them is secured to your home when in fact it’s not?
Well, what the debtor needs to do at this point is file an objection to that claim and provide the Court proof as to their position. If successful, the Court will only allow the filed claim up to the amount the Judge deems valid.
Motion to Dismiss
There are several requirements that the debtor must abide by not only when filing his/her bankruptcy case but also must continue to follow through the entire case itself. Chapter 7 cases are generally open for 3-4 months. On the other hand, most Chapter 13 cases remain active for 3-5 years. If at any point through your case you fail to do something that is required of you, the trustee or a creditor can motion the court to dismiss your case. If they are successful in their argument, the Judge will dismiss your case immediately. Knowing how to avoid being put in such a position will be imperative to the success of your bankruptcy filing.
Don’t put your bankruptcy case at risk by not understanding the importance of motion work in your bankruptcy case. Contact Bains Legal today for your free no-hassle consultation.
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