Adequate protection payments

[DivorceRuinedMe]

Can someone explain to me what these are? I am a member of another BK board and there was a thread about this. I am at a loss here.

[HHM]

Adequate protection payments arise from an Adequate Protection Order (APO). You most commonly see APO's in the BK/Foreclosure scenario...i.e. debtors house is being foreclosed, the debtor files BK to stop (slow down) the foreclosure but wants to keep the house. The foreclosure company files a motion to lift stay to continue the foreclosure. The debtor than proposes a plan to make up the missed payments and continue to make the regular payments, if the bank accepts, the plan is put down as an Adequate Protection Order in lieu of the Motion to Lift Stay being granted and the APO is filed with the BK Court and signed by the judge. The other aspect of the Adequate Protection Order is that it gives the creditor a streamlined process to lift the Automatic Stay if the Debtor does not live up to their obligations of the APO. APO's can be used in either a chapter 13 or 7, and APO's are most common with secured debt.

[HHM]

Oh yeah, a debtor can propose an APO over the objections of the Creditor. After all, the purpose of a Motion to Lift Stay is for a creditor to perfect their interest in the secured property, but if the debtor is able to continue to make payments and can make-up any short fall in a reasonable amout of time, the judge may deny the creditors Motion to Lift Stay and enter the debtor's APO.

[DivorceRuinedMe]

Thanks HHM, I'm just wondering, do you think a mortgage company that you are CURRENT on would propose APOs? I heard that they are put into place when you don't have significant equity in your house.

My situation is that I just bought a house and by the time that I file for BK7 I won't have any significant equity in the house. I will however have paid everything on time by the time that I file. Would an APO be issued in this instance you think?

[HHM]

If you are current on your various mortgages at the time you file for Chapter 7 and continue to make your payments on time, you probably wont need an APO. APO's are generally only used when the debtor has missed payments...the APO is a way for a debtor to make-up those missed payment in a chapter 7. If you are current on your payments going into a chapter 7, you wont really need an APO.

[DivorceRuinedMe]

If you are current on your various mortgages at the time you file for Chapter 7 and continue to make your payments on time, you probably wont need an APO. APO's are generally only used when the debtor has missed payments...the APO is a way for a debtor to make-up those missed payment in a chapter 7. If you are current on your payments going into a chapter 7, you wont really need an APO.

Thanks! I was looking at it more of as a "bad" thing for me, more as a protection for the lein holder but I guess this is not the case.

[tofargone]

You will also see the APO when you have a vehicle crammed. Mine is listed that way.