Motion for Relief (MFR)

A motion for relief from stay (commonly abbreviated MFR) is a formal petition filed by a creditor in bankruptcy court requesting that the judge lift the automatic stay on a specific asset, allowing the creditor to resume foreclosure or other enforcement action. The automatic stay — the court-imposed injunction that takes effect the moment a borrower files for bankruptcy — halts all collection activity, including active foreclosure proceedings, demand letters, lawsuits, and any attempt to enforce or collect on a debt. The MFR is the only proper legal path for a lien holder who needs to proceed while the bankruptcy case remains open.

How the Automatic Stay Works

When a borrower files a voluntary petition for Chapter 7 or Chapter 13 bankruptcy, the automatic stay goes into effect immediately. For note investors, this means:

• All foreclosure proceedings are paused
• No demand letters or collection calls can be made
• No loan modification negotiations can proceed
• No discounted payoff offers can be extended
• Any violation of the stay exposes the creditor to sanctions and damages

The stay remains in place until the bankruptcy case is resolved (through discharge or dismissal) or until the court grants a motion for relief.

Grounds for Filing an MFR

Bankruptcy courts evaluate motions for relief under Section 362(d) of the Bankruptcy Code. The two most common grounds are:

In practice, most MFR filings by mortgage lien holders are based on one of two situations: the borrower has stated their intention to surrender the property, or the borrower is not making adequate protection payments during the bankruptcy and the creditor's collateral position is at risk.

The MFR Process

Filing and resolving a motion for relief typically follows this sequence:

1. Attorney preparation — Your bankruptcy attorney drafts the motion, identifying the specific asset (the mortgaged property), the basis for relief, and the relief requested
2. Filing with the court — The motion is filed in the bankruptcy court where the case is pending, along with the required filing fee
3. Service on the debtor — The borrower and their attorney (if represented) receive notice of the motion
4. Hearing — The court schedules a hearing, typically within 30 days of filing. The borrower may oppose the motion
5. Order — The judge grants or denies the motion. If granted, the order specifies what actions the creditor may take (usually resuming foreclosure)

The timeline from filing to order is typically 30 to 60 days, though contested motions can take longer. Attorney fees for filing an MFR generally range from $500 to $2,000, depending on the complexity of the case and whether the motion is opposed.

When to File an MFR

The decision to file a motion for relief involves a cost-benefit analysis that depends on the bankruptcy chapter, the borrower's stated intentions, and your carrying costs.

Chapter 7 Cases

Chapter 7 bankruptcies resolve in three to five months. Filing an MFR makes sense when:

• You were in the middle of a foreclosure when the borrower filed
• The borrower has stated an intention to surrender the property
• Your carrying costs (servicing fees, property taxes, insurance) during the stay period exceed the cost of filing the motion

Courts routinely grant relief in Chapter 7 cases where the borrower intends to surrender — there is no reason to delay the inevitable. However, if the case is expected to close within a few weeks, the cost of the motion may not be justified.

Chapter 13 Cases

Chapter 13 cases span three to five years, making the MFR a more critical tool. Filing is appropriate when:

• The borrower has fallen behind on plan payments and is not making adequate protection payments to protect your lien
• The borrower's plan does not propose to cure the arrears on your mortgage
• The property is declining in value and your collateral position is deteriorating

If the court grants relief in a Chapter 13 case, you can proceed with foreclosure even while the rest of the bankruptcy continues.

Reading MFR Filings on PACER

When conducting due diligence on a non-performing loan with bankruptcy history, motions for relief from stay appear in the case docket on PACER. Two critical points for note investors reviewing these filings:

• Not every MFR targets your property. Borrowers often have multiple financed assets — vehicles, other real estate, equipment. An MFR filed by another creditor may be for a car loan, not the property securing your lien. Always read the motion itself to confirm which asset is involved.
• Check the order, not just the motion. A filed motion does not mean relief was granted. Look for the court's order on the motion. A granted order means the creditor was authorized to proceed. A denied order means the stay remains in place. If the senior lien holder filed an MFR and it was granted, the senior may be proceeding with foreclosure — which could wipe out your junior lien at the sale.

Serial Filers and Automatic Stay Limitations

Borrowers who file for bankruptcy repeatedly within a short period face restrictions on the automatic stay:

These limitations are important during due diligence. A borrower with a history of serial filings is less protected by the stay, which can accelerate your path to foreclosure.

Cost-Benefit Considerations

Practical Tips for Note Investors

• File a proof of claim first. Ensure your servicer has filed a proof of claim in the bankruptcy case before filing the MFR. This preserves your standing and your right to receive distributions.
• Work with a bankruptcy attorney. The MFR is a specialized filing that must comply with local bankruptcy court rules. Use an attorney experienced in creditor-side bankruptcy work in the relevant district.
• Coordinate with your servicer. Your loan servicer needs to know that you are pursuing relief so they can prepare to resume foreclosure once the order is entered.
• Monitor the case after filing. Even after relief is granted, the borrower can file a new bankruptcy petition (triggering a new automatic stay, subject to the limitations above). Set calendar reminders to check the PACER docket regularly throughout the foreclosure process.