FUNDAMENTALS OF BANKRUPTCY FOR LENDERS
General Principles of Bankruptcy Law
4. IN REM RELIEF FROM AUTOMATIC STAY AS TO REAL PROPERTY
a. A Court may enter an Order determining that a bankruptcy filing was part of a scheme to delay, hinder, or defraud creditors, by:
(1) Transferring any ownership or other interest in real property without the consent of the secured creditor or court approval; or
(2) Multiple bankruptcy filings affecting such real estate.
b. Under BAPCPA, such an Order may be recorded, pursuant to state law, among the land records related to interests or liens upon real property.
c. If the Order is so recorded, the Order shall be binding in any other bankruptcy case filed by the debtor that affects such real estate for a period of two (2) years from entry of the Order.
d. The debtor may move for relief from the Order based on:
(1) Changed circumstances; or
(2) Good cause shown.e. Debtor must provide notice and obtain a hearing before the Court may award relief from the Order.
f. Foreclosure or other action to enforce a lien or security interest in property after entry of an In Rem Order is not stayed for a period of two (2) years after entry of the Order unless the Debtor successfully petitions the Court to re-institute the stay.
g. This type of relief may be available under current law under very limited circumstances. BAPCPA provides a clear statutory protection for lenders from this type of fraudulent and deleterious behavior by debtors.
For more information or to request a presentation regarding BAPCPA, please contact Spotts Fain attorneys, Robert H. Chappell, III (804) 697-2025 or Jennifer J. West (804) 697-2094.
