When a creditor has a lien on collateral he is called a secured creditor. If a secured creditor is being paid in a chapter 13 bankruptcy plan then, if he is not being treated properly, he can file a motion to lift the stay, which asks the bankruptcy judge to let the creditor have his collateral (which usually is your house or car).
The two things which usually cause a motion such as this to be filed would be the failure to make mortgage payments which were due after the date that the debtor filed bankruptcy and the failure to insure the collateral per the agreement with the creditor. Normally, the motion is filed for both reasons if the collateral is a house. However, because automobile loans usually must be paid in the payment plan, the only reason a motion is filed regarding automobile loans is for the failure to insure.
These motions must be responded to in writing according to the rules within a very specific timeframe from the date of their being issued by the court, which may only be perhaps 4 or 5 days after you get your copy in the mail. You need to call your attorney, although he would have gotten his the day it was filed and, hopefully, has prepared a response and is going to contact you.
A hearing is set by the bankruptcy court and normally the attorneys for the bank and the debtor work out a settlement, or else the matter is heard by a bankruptcy judge and the debtor must be present to
The typical settlement regarding the lack of insurance involves the debtors providing proof of insurance within a certain period of time and a drop-dead provision. In NC, this is called a time-bomb provision. It means that you must provide the insurance (or pay the payment, as the case may be) within a certain amount of time and, if you are a day late, then the bank will file an affidavit with the bankruptcy court saying you have not honored your end of the bargain and the court will give the bank permission to get its collateral without a hearing or any notice to you.
The settlement terms for most motions to lift the stay regarding missed payments would involve your paying the back payments and the banks usual $750 in attorneys fees and costs in six equal monthly installments, beginning immediately, PLUS your regular payment. What kills many chapter 13 bankruptcy plans is when these motions are filed and settled and the debtor just cannot afford to pay the regular chapter 13 bankruptcy plan payment, plus the regular mortgage payment, plus the extra amount required to catch up the mortgage that is required by the settlement.
However, if a debtor does not do it, then the house is gone. The bankruptcy courts will not let you come back for a second chance after the bank has lifted the stay because you did not honor the settlement of the motion to lift the stay.
Normally, your attorney will charge an extra fee for handling the motion to lift the stay.