For example, in a case where an individual is facing the foreclosure of his home, a Chapter 7 will temporarily stop the lawsuit. However, the creditor may file a motion, called a Motion for Relief from the Automatic Stay, in which the creditor requests the Court to allow it to continue the foreclosure. There is generally no basis for a Chapter 7 debtor to force a creditor to take monthly payments, and the request of the creditor is routinely granted. On the other hand, a reorganization not only stops the foreclosure, but provides a mechanism for the creditor to be paid monthly payments on the defaulted payments, and requires the creditor to reinstate the loan. At the end of the 24 month period, the loan will be fully reinstated.
Exemptions vary from state to state.
The reason that state law governs bankruptcy exemptions is again traced to the United States Constitution. Congress, in the bankruptcy laws, specifically gave states the right to opt in or out of the federal exemptions. Some states have opted to retain federal exemptions. Other states have opted out, and instead, apply their state exemptions. For example, the State of Florida has opted out of all federal laws on exemptions.