You’re a creditor with a lien on the debtor’s property. The debtor hasn’t paid you, and you want to take back the collateral, but the debtor has filed bankruptcy.
Due to the Bankruptcy Code’s automatic stay (a federal injunction that the federal courts take very seriously), you can’t repossess the collateral. The only option: Get the automatic stay lifted, then move forward with repossession. There are basically four ways for the stay to lift:
1. File a Motion for Relief from Stay. The filing fee is $150, and typically a lawyer is going to spend about 2.5 hours working on it, depending on how complicated it is, and assuming the court doesn’t schedule a hearing (if the court schedules a hearing–which is rare–the fees escalate).
2. Get the debtor’s attorney and the bankruptcy trustee to stipulate to the Relief from Stay. There is no filing fee, so that’s good. Unfortunately, it’s often very difficult to get the debtor’s attorney and trustee to stipulate.
3. Wait for the debtor to obtain a discharge (which, in a simple bankruptcy case, typically happens in about three-four months), then ask the trustee to abandon the property. The discharge, when combined with an abandonment, equals relief from the automatic stay for purposes of repossessing collateral.
4. Wait for the bankruptcy case to terminate. After the Order of Final Decree is entered, the automatic stay lifts for all purposes (just make sure your repossession efforts don’t run afoul of the permanent injunction that follows a bankruptcy . . . long story).