Consent Orders and Stipulated Relief from Stay

What Is a Consent Order?

A consent order -- also called a stipulated order, agreed order, or stipulation -- is a court-approved agreement between the debtor and a creditor that resolves a motion for relief from the automatic stay without a contested hearing. Both parties negotiate the terms, sign the agreement, and submit it to the court for approval.

Consent orders are extremely common in relief from stay litigation. Many experienced bankruptcy judges and practitioners consider them the preferred resolution because they provide certainty for both sides and conserve judicial resources. Instead of a hearing where one side wins and the other loses, both parties get something they can work with.

The court is not required to approve a consent order. The judge reviews the terms to ensure they are fair and consistent with bankruptcy law. In practice, courts almost always approve consent orders that are reasonable on their face.

What a Typical Consent Order Includes

While every consent order is tailored to the specific facts, most include these standard provisions:

Adequate Protection Payments

The debtor agrees to make specific adequate protection payments -- usually the regular monthly payment on the secured debt. The order specifies the exact dollar amount and the due date each month. For a mortgage, this typically means the regular PITI payment. For a car loan, it means the regular monthly payment.

Cure of Post-Petition Arrearage

If the debtor has missed post-petition payments, the order may require the debtor to cure those missed payments by a specific date -- either as a lump sum or in installments over a defined period.

Insurance Requirements

The debtor must maintain insurance on the collateral and provide proof of insurance to the creditor. The order may specify minimum coverage amounts and require the creditor to be listed as a loss payee or additional insured.

Automatic Relief Trigger

This is the most critical -- and most dangerous -- provision. The order states that if the debtor fails to comply with any of the terms (misses a payment, lets insurance lapse, etc.), the stay is automatically lifted without further court hearing. The creditor simply files an affidavit or declaration of default with the court, and relief becomes effective.

Notice Provisions

Some consent orders require the creditor to give the debtor a short notice period (often 5 to 10 days) before the automatic relief takes effect, giving the debtor one last chance to cure. Other orders provide for immediate relief with no notice. Negotiate for a notice-and-cure provision if possible.

Benefits of a Consent Order

For debtors, consent orders offer several significant advantages over a contested hearing:

• You keep the property. As long as you comply with the terms, the creditor cannot repossess, foreclose, or take other action.
• Certainty. You know exactly what you need to do and when. No surprises at a hearing.
• Negotiated terms. You can negotiate the payment amount, due dates, cure schedule, and notice provisions. A court-imposed order after a hearing may be less favorable.
• No adverse ruling. A consent order avoids the risk that the court grants outright relief. If you lose at a hearing, you lose the property. A consent order gives you a path to keep it.
• Good faith signal. Entering into a consent order demonstrates to the court and the trustee that you are acting in good faith and cooperating with creditors.
• Saves time and money. No hearing preparation, no evidence gathering, no attorney fees for court appearances. The negotiation often happens by phone or email.

Risks of a Consent Order

Consent orders are not risk-free. Understand the downsides before agreeing:

• Automatic relief is absolute. If you miss a payment by even one day (in orders without a grace period), the stay lifts automatically. No second hearing, no second chance. The creditor can act immediately.
• You waive your right to contest. By agreeing to the consent order, you are usually waiving your right to oppose the motion at a hearing. If you cannot comply with the terms, you cannot go back and argue the motion should be denied.
• Terms may be aggressive. Creditors' attorneys draft consent orders to favor their clients. The proposed payment schedule may be too tight, the cure deadline too soon, or the conditions too strict. Do not sign the creditor's first draft without negotiating.
• May not account for future problems. If your financial situation worsens (job loss, medical emergency), the consent order does not care. The terms are fixed, and failure to comply is failure to comply, regardless of the reason.

How to Negotiate a Consent Order

Negotiation typically happens between the debtor (or debtor's counsel) and the creditor's attorney before or at the hearing. Here are practical tips:

Start with a Realistic Proposal

Before responding to the creditor's draft, calculate what you can actually pay each month after all essential expenses. Do not promise more than you can deliver. A consent order you cannot comply with is worse than no consent order at all.

Negotiate a Cure Period

Ask for a cure period in the automatic relief provision. Instead of immediate relief upon default, propose that the creditor must give you 7 to 14 days written notice of default, during which you can cure the missed payment. Many creditors will agree to a short cure period.

Specify Payment Method and Address

Include clear instructions on where and how to send payments. This avoids disputes about whether payments were received on time. If paying by mail, build in extra time for delivery.

Address the Arrearage Realistically

If you owe back payments, negotiate a reasonable cure schedule. Proposing to cure three months of arrears in one lump sum next week is not realistic. Spreading the cure over several months is more achievable.

Get Everything in Writing

The consent order must be in writing, signed by both parties, and entered by the court. Verbal agreements are not enforceable. Make sure the signed order matches what you negotiated.

Consider Your Chapter 13 Plan

If you are in Chapter 13, coordinate the consent order terms with your plan. The plan should provide for the creditor's claim in a way that is consistent with the consent order. Conflicting obligations create problems.

When to Reject a Consent Order

A consent order is not always the right choice. Consider fighting the motion at a hearing if:

• You have strong defenses that are likely to result in the motion being denied.
• The creditor's proposed terms are unreasonable and they refuse to negotiate.
• The creditor has weak evidence or procedural defects in the motion.
• You can demonstrate that you are current on payments and the motion is baseless.
• You need the court to make specific findings of fact that benefit your case.

See How to Respond to a Motion for Relief from Stay for a complete guide to contesting the motion.

Frequently Asked Questions