If you file bankruptcy in the middle of a foreclosure, I wouldn’t be at all surprised if you thought that that would be reason enough for the foreclosure sale to be disrupted, as a technicality of sorts. Well, the easy response to that assumption is, no, it won’t, but it may give you a period of stay from legal proceedings. The full, more accurate response is, well, much more complicated, to say the least.
While filing bankruptcy will generally not stop the foreclosure sale, there are two very important caveats to this rule that must be considered. First, if this is your 2nd bankruptcy filing within the last 12 months, you’re only given a 30-day stay of action on the foreclosure sale. Second, if this is your 3rd bankruptcy filing in the last 12 months, you won’t be granted any time at all. Instead, you must file a hearing to impose the stay.
The general process of this situation is as follows, however, I must state that, since I practice in the state, these are the procedures for California. I cannot speak definitively for the other 49 states. However, the process is fairly uniform throughout the country. In addition, I’m assuming that you’ve not fallen under the two caveats mentioned previously.
That in mind, let’s take a look at the how the process occurs. First, the lender will
Motion with the court.
The lender needs to receive court approval to proceed with any action against your property. You’d be well-advised to assume this will be sought soon after bankruptcy is filed, though some lenders may take a few weeks to get it done. After that’s done,
A hearing will be set.
Usually, it’s set 30 days after the lender files the motion. You’ll be notified of it, but there’s not much reason for you to be there. Then,
There will be an order from the court.
The judge will grant the lender’s request, after which, the lender will submit an order for the judge’s signature. The judge may take a few days to sign it. Once the lender has the order,
The property will be rescheduled for sale.
Generally, it will be included with other properties the lender has for sale. That is to say, they’ll have the same sale date. This could happen as soon as a few days after the lender receives the order. Once this happens, you’ll have to
Contact the lender for relocation assistance.
A few lenders will give you some money to leave the property quietly. You should, however, make sure the lender doesn’t evict you. That would do your credit no favors.
Hopefully other unsecured debt was eliminated, as a bankruptcy notation on your credit for the next 10 years is no small price to pay, and certainly not worth a few more months in a house. If you have additional questions regarding how bankruptcy could affect your foreclosure, please get in touch with the southern California bankruptcy attorneys at Westgate Law today.