Bankruptcy can be a challenging hurdle. Understanding what can and cannot happen during this period is vital. One commonly asked question during this period is, “Can a lender ask for relief and legally foreclose on my home during a Chapter 7 bankruptcy proceeding? Can I get my house back?” Here’s our answer to it.
Bankruptcy Isn’t A Shield!
Bankruptcy doesn’t mean you’re immune in every situation. It’s an intricate arrangement and certainly won’t put a permanent halt to all foreclosure proceedings. You’re only free from paying any discharged debts. The lender isn’t obligated until you receive the discharge to exercise its rights against the property.
Here’s How a Lender Can Legally Take Your Property.
Let’s say you were delinquent on your mortgage payments when filing for bankruptcy. In this scenario, the lender still has certain rights. They can seek the court’s approval for relief, take the house out of bankruptcy protection, and continue with the sale. Lenders aren’t bound to wait for your case to be discharged since that could easily take 5 to 7 months or more.
Understanding Automatic Stay
When you file for bankruptcy, an automatic stay is placed on most creditor actions, including foreclosure. This stay is essentially a temporary suspension (with some limitations), giving you a breathing room. However, this doesn’t mean the lender is powerless.
Here’s What You Must Know About Motion for Relief
Despite the automatic stay, lenders can and often do request the court’s permission to proceed with foreclosure. This is done through a Motion for Relief from Stay. If you cannot provide evidence that contradicts the lender’s mortgage delinquency claim, the court will likely grant this motion. This legal process allows the lender to resume foreclosure activities, sometimes as soon as three to four weeks after filing the motion.
Exploring the Right to Redemption
You may ask, “Can I get my home back?” The possibility of reclaiming your home post-foreclosure, known as the “right of redemption,” varies significantly from state to state. Some states offer the opportunity to recover your property, while others may not. It’s a complex legal area, emphasizing the importance of personalized legal advice.
Finding Your Footing After Bankruptcy
At Westgate Law, we understand that losing a home is an emotionally and financially draining experience. It may not be easy, but it’s also not the end of the road. Many of our former clients have successfully purchased new homes within a few years post-bankruptcy and foreclosure, often at more promising terms. So, it’s crucial to get expert legal counsel, and you’ll be able to devise the right way out for your needs.
The Bottom Line
In a Chapter 7 bankruptcy, homeowners facing foreclosure can temporarily suspend the process through an automatic stay. However, this doesn’t permanently stop the lender from foreclosing if the homeowner is behind on mortgage payments.
The lender can request court permission to continue with foreclosure, and the bankruptcy discharge does not erase the mortgage lien, allowing the lender to foreclose even after bankruptcy proceedings conclude. This decision is influenced by specific state laws, particularly regarding the right to reclaim foreclosed property.
Ready to Take the Next Step? Contact Us Today!
If you’re grappling with bankruptcy or foreclosure, don’t wait to seek legal assistance. This can be an overwhelming experience, and you’d not want to go at it alone. Contact Westgate Law today to explore your options and start building a brighter financial future. Call us at 800-891-1995, and let’s turn this challenge into an opportunity for growth and recovery.