What Remedies Does A Secured Creditor Have In A Bankruptcy Case?
If a creditor’s claim is supported by a lien, the lien survives bankruptcy as a claim on the property to which it attached before bankruptcy, unless a judge avoided the lien during the bankruptcy. A secured creditor can ask the court for relief from the automatic stay in order to proceed with efforts to collect the collateral on which the debt is secured. For example, a secured creditor may want relief from the stay to foreclose on real estate or repossess a car. One seeking relief from the stay must show the bankruptcy judge, after a hearing, that there is cause for the granting of relief. This might include showing that the property is not insured or that the debtor has no equity in the property and that the property is not needed for a reorganization. The court may grant relief at the initial hearing or set an evidentiary hearing to make a final decision.
