A motion for relief from stay is generally warranted when either the debtor is surrendering the property (essentially giving up on the debt), or we can establish that the lender is not adequately protected.

The criteria for determining adequate protection in a Chapter 7 case is fairly straightforward – is there any equity in the property beyond the sum total of the debts secured by the collateral? If the answer to that question is “no,” then we are usually able to prosecute a MFR in a Chapter 7 bankruptcy case, as there is no equity in the property available for benefit of the bankruptcy estate. In the Southern District of Ohio we will also need to obtain trustee abandonment of the property by separate pleading (in the Northern District both are obtained in a single pleading).

The criteria for a Chapter 13 filing are a little more involved. In order to show a lack of adequate protection in a Chapter 13 case we have to show that the debtor (or the trustee in a conduit or “trustee pay all” plan) is not making the post-petition mortgage payments (those due AFTER the filing of the bankruptcy case). Most of the Ohio bankruptcy courts and judges want to see a post-petition arrearage of three payments before entertaining a MFR in a Chapter 13 case. Under special circumstances (i.e., serial filings indicative of bad faith, or a relatively high payment amount or pre-petition arrearage) a MFR may be justified for something less than the usual three month post-petition delinquency. MFRs in Chapter 13 cases can often be resolved with agreements allowing the debtor to catch up on the post-petition arrearages over a reasonable period of time.