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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

ROSEMARY KOCH, 

 Appellant, 

 Case No. 15-cv-11737 

 HON. GERSHWIN A. DRAIN 

v. 

FEDERAL NATIONAL 

MORTGAGE ASSOCIATION, 

 Appellee. 

_______________________________/

OPINION AND ORDER AFFIRMING BANKRUPTCY COURT’S ORDER 

TO LIFT THE AUTOMATIC STAY AND CANCELING HEARING 

SET FOR JULY 22, 2015 

 Appellee Federal National Mortgage Association moved for relief of the automatic stay, 

which was triggered by Appellant Rosemary Koch’s latest Chapter 13 bankruptcy filing. The 

district court granted Appellee’s motion. Appellant now appeals the district court’s decision to 

lift the automatic stay. 

The Court has reviewed and considered all briefs timely filed by both parties and finds no 

need for a hearing. See E.D. Mich. L.R. 7.1(f)(2). Upon review of the parties’ briefs, the Court 

concludes that Appellee was entitled to relief, under 11 U.S.C. § 362(d)(1), (2), and therefore 

affirms the Bankruptcy Court’s decision.

I. BACKGROUND 

Presently before the Court is Appellant Rosemary Koch’s (“Koch”) Notice of Appeal 

from the United States Bankruptcy Court for the Eastern District of Michigan (the “Bankruptcy 

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Court”). The Notice was filed on May 15, 2015. Koch requests that this Court review the 

Bankruptcy Court’s decision to lift the automatic stay, specifically as it concerns a parcel of real 

property.

Appellee Federal National Mortgage Association (“Fannie Mae”) purchased the real 

property at issue in a foreclosure sale held, on June 12, 2014, after Koch defaulted under her 

relevant loan agreement. A Sheriff’s Deed was thereafter recorded in Liber 4053, Page 950 of 

Washtenaw County Records, on June 27, 2014. ECF No. 3, Ex. 2. Koch failed to redeem the 

property after the sheriff’s sale within the six-month statutory period. Consequently, Koch’s 

opportunity to redeem the property expired on December 12, 2014. 

On March 2, 2015, Koch filed her most recent petition for protection under Chapter 13 of 

the Bankruptcy Code.1

 For this reason, an automatic stay applied to the actions of all of Koch’s 

creditors. See 11 U.S.C. § 362(a). At the time of Koch’s filing Fannie Mae was seeking 

recovery of real property, of which Koch held possession.

On April 24, 2015, after holding oral arguments on the matter and being fully advised in 

the premises, the Bankruptcy Court held that Fannie Mae is entitled to continue eviction 

proceedings for the recovery of the real property, pursuant to 11 U.S.C. §§ 362(c)(3) and 

362(d)(1), (2), and (4). Accordingly, the Bankruptcy Court lifted the automatic stay concerning 

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 Prior to the present bankruptcy filing, Koch has attempted to undergo bankruptcy proceedings twice 

before. On January 9, 2013, Koch filed for Chapter 7 bankruptcy protection. The Bankruptcy Court dismissed 

Koch’s Chapter 7 bankruptcy petition on September 18, 2013, “[f]or [f]ailure to [p]rovide [n]ecessary [d]ocuments.” 

ECF No. 3, Ex. 4. 

Koch filed another bankruptcy petition on July 15, 2014. See ECF No. 3, Ex. 5. Koch, again, failed to file 

necessary documents with the Bankruptcy Court. Accordingly, on the same date, the Bankruptcy Court issued a 

Notice of Missing Documents. ECF No. 3, Ex. 5. The Bankruptcy Court instructed Koch that she was required to 

file the missing documents by July 29, 2014. Koch failed to do so, and accordingly, the Bankruptcy Court dismissed 

her first Chapter 13 bankruptcy petition on August 13, 2014. 

Koch filed her second Chapter 13 bankruptcy petition, otherwise her third bankruptcy petition, on March 2, 

2015. On May 4, 2015, the Chapter 13 Bankruptcy Trustee (the “Trustee”) filed a Motion to Dismiss. ECF No. 3, 

Ex. 9. The Trustee cited Koch’s failure to attend the first creditor’s meeting as well as Koch’s failures to remit any 

Plan payments and to propose a Chapter 13 Plan as reasons for dismissing her current bankruptcy petition. ECF No. 

3, Ex. 9 (debtor’s failures “constitute[] a material default and unreasonable delay that is prejudicial to creditors 

pursuant to 11 U.S.C. Section 1307(c).”). 

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the relevant real property. On May 4, the Chapter 13 Trustee filed a motion to dismiss Koch’s 

bankruptcy petition. The Trustee noted that Koch has essentially failed to participate in the 

bankruptcy proceedings. See ECF No. 3, Ex. 9.

II. STANDARD OF REVIEW 

District courts must review “a bankruptcy court’s order granting or denying relief from 

an automatic stay only for abuse of discretion.” In re Laguna Assocs. Ltd. P’ships, 30 F.3d 734, 

737 (6th Cir. 1994) (citing In re White, 851 F.2d 170, 174 (6th Cir. 1988)); see also In re M.J. 

Waterman & Assocs., Inc., 227 F.3d 604, 607 (6th Cir. 2000) (citing In re Zick, 931 F.2d 1124, 

1126 (6th Cir. 1991)) (“Equitable determinations are within the sound discretion of the 

bankruptcy judge and will not be disturbed absent abuse of discretion.”). 

An abuse of discretion is “a ‘definite and firm conviction that the court below committed 

a clear error of judgment.’” Id. at 607-8 (citing Soberay Mach. & Equip. Co. v. MRF Ltd., Inc.,

181 F.3d 759, 770 (6th Cir. 1999); Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir. 1996)). 

The standard is, therefore, “not how the reviewing court would have ruled, but rather whether a 

reasonable person could agree with the bankruptcy court’s decision; if reasonable persons could 

differ as to the issue, then there is no abuse of discretion.” Id. at 608 (citing Washington v. 

Sherwin Real Estate, Inc., 694 F.2d 1081, 1087 (7th Cir. 1982); In re Carter, 100 B.R. 123, 126 

(Bankr. D. Me. 1989)).

Additionally, when reviewing bankruptcy appeals, the district court must apply a de novo

standard of review to conclusions of law. In re MCI, Inc., 151 B.R. 103, 106 (E.D. Mich. 1992) 

(citing In re Caldwell, 851 F.2d 852, 857 (6th Cir. 1988)). “[F]actual determinations which the 

bankruptcy court has made are subject to the clearly erroneous standard of review.” Id. “Only 

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where there is the ‘most cogent evidence of mistake or miscarriage of justice’ may the district 

court disturb a factual finding made by the bankruptcy court.” Id.

III. DISCUSSION 

Koch presently challenges the Bankruptcy Court’s order to lift the automatic stay as it 

concerns the real property, mentioned above. The facts in this case are not contested. The 

parties instead dispute whether the Bankruptcy Court granted Fannie Mae relief from the 

automatic stay on appropriate grounds. 

As a result, the Court is therefore faced with the narrow question of whether the 

Bankruptcy Court abused its discretion when it granted Fannie’s motion to lift the automatic 

stay. Koch contends that Fannie Mae had not demonstrated “cause,” which is required in order 

to entitle it to relief from the automatic stay. 

On the other hand, Fannie Mae argues that it was appropriately granted relief from the 

automatic stay. Fannie Mae first contends that Koch lost “all right, title, and interest in the 

Property after Koch failed to redeem the Property before the statutory period of redemption 

expired on December 12, 2014.” ECF No. 3, at 6. Fannie Mae also contends that the automatic 

stay terminated, pursuant to 11 U.S.C. § 362(c)(3), because Koch failed to file a continuation 

within 30 days of initiation of the bankruptcy proceedings. ECF No. 3, at 6. Fannie Mae asserts 

that Koch’s continuation deadline was April 1, 2015. ECF No. 3, at 8.

“The automatic stay is one of the fundamental debtor protections provided by the 

bankruptcy laws.” In re Glenn, 760 F.2d 1428, 1436 (6th Cir. 1985). The automatic stay “stops 

all collection efforts, all harassment, and all foreclosure actions.” Id. It essentially “permits the 

debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial 

pressures that drove [her] into bankruptcy.” Id.

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The automatic stay may, however, be lifted. The Bankruptcy Code provides that “on 

request of a party in interest and after notice and hearing, the court shall grant relief from the stay 

...” on certain enumerated conditions. 11 U.S.C. § 362(d). Among these reasons, a bankruptcy 

court may lift the automatic stay “for cause, including the lack of adequate protection of an 

interest in property of such party in interest[.]” 11 U.S.C. § 362(d)(1).

A bankruptcy court may also lift the stay “with respect to a stay of an act against property 

... if—the debtor does not have an equity in such property; and such property is not necessary to 

an effective reorganization[.]” 11 U.S.C. § 362(d)(2). “Relief requires a showing of both 

elements.” In re Plastech Engineered Prods., Inc., 382 B.R. 90, 109 (Bankr. E.D. Mich. 2008). 

Showing that a property is “necessary to an effective reorganization” requires “not merely a 

showing that if there is conceivably to be an effective reorganization, this property will be 

needed for it; but that the property is essential for an effective reorganization that is in prospect.”

Id. (emphasis in original). This means “there must be a reasonable possibility of a successful 

reorganization with a reasonable time.” Id. (citing United Sav. Ass’n of Tex. v. Timbers of 

Inwood Forest Assocs., Ltd., 484 U.S. 365, 375-76 (1988)).

Furthermore, a debtor effectively loses her interest—or equity—in property if it fails to 

redeem it after a foreclosure sale. The Sixth Circuit has held that “a Chapter 13 debtor may cure 

a default on a mortgage on his principal residence even when the debt has been accelerated and a 

judgment of foreclosure has been entered provided that no foreclosure sale has taken place.” In 

re Glenn, 760 F.2d at 1442. However, “[o]nce the property has been sold, the right to cure the 

default and reinstate the terms of the mortgage ... ceases.” Id. 

If the mortgagee then fails to redeem the subject property following the foreclosure sale, 

the sale is final. See In re Agee, 330 B.R. 561, 568-9 (E.D. Mich. 2005) (“The Sixth Circuit 

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understood that a foreclosure sale may not be final until some further action required under state 

law.... title does not pass to the buyer until the right of redemption expires with no redemption 

so that a debtor does not retain an ownership interest after the Sheriff’s auction.”). Moreover, 

“the automatic stay provisions of § 362(a) do not toll or extend the running of state statutory 

periods of redemption following foreclosure sales.” In re Glenn, 760 F.2d at 1442. 

In light of these principles, the Court concludes that the Bankruptcy Court did not abuse 

its discretion when it lifted the automatic stay. As mentioned above, a bankruptcy court may lift 

the stay “with respect to a stay of an act against property ... if—the debtor does not have an 

equity in such property; and such property is not necessary to an effective reorganization[.]” 11 

U.S.C. § 362(d)(2). As an initial matter, it is clear that Koch has no interest in the property, 

which is the subject of the relief from automatic stay. 

The factual circumstances in this case are analogous to the facts in In re Glenn. Here, as 

in In re Glenn, Koch lost title to the subject property through a foreclosure sale and, in particular, 

her failure to redeem the property after the foreclosure sale. Koch was required to redeem the 

subject property, if she so chose, by December 12, 2014, yet failed to do so. 

Months following the redemption deadline, Koch proceeded to file the immediate 

bankruptcy petition on March 2, 2015. The property at issue is thus not protected by the 

automatic stay because, on March 2, 2015, Koch had no legal right or interest in said property, 

losing her rights and interest on December 12, 2014.

The Court further concludes that the Bankruptcy Court, in its sound discretion, 

reasonably determined that the subject property was not necessary for an effective 

reorganization. See 11 U.S.C. § 362(d)(2). Koch has not shown that subject property is essential 

for an effective reorganization. In re Plastech Engineered Prods., Inc., 382 B.R. at 109. When 

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considered in light of the fact that Koch has had two prior bankruptcy petitions—within the past 

two years—be dismissed,2

 and a pending motion of dismissal—filed by the Trustee—currently 

before the Bankruptcy Court, it is evident that there is no “reasonable possibility of a successful 

reorganization with a reasonable time.” See id.

Consequently, the Court finds that the Bankruptcy Court did not abuse its discretion by 

granting Fannie Mae’s motion to lift the automatic stay. Accordingly, the Court need not 

venture into the question of whether Koch’s alleged abuse of the bankruptcy system entitles 

Fannie Mae to relief. The reasoning that the Court has provided above is sufficient. 

IV. CONCLUSION 

 The Bankruptcy’s Court order, entered on April 24, 2015, lifting the automatic stay, is 

AFFIRMED.

 The hearing in regard to the matter, set for Wednesday, July 22, 2015, is HEREBY

CANCELED. 

IT IS SO ORDERED.

Dated: July 20, 2015 

 /s/Gershwin A Drain 

 HONORABLE GERSHWIN A. DRAIN 

 U.S. DISTRICT JUDGE 

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