When homeowners are behind on payments, the lender typically sends the homeowner a Notice of Default. The borrower then has, typically, ninety (90) days catch up on the past due balances for the loan. If the borrower does not make the required payments owed, the lender can issue a Notice of Sale. This Notice of Sale provides notice that the lender will be selling the property through a Trustee Sale, at times on the Courthouse steps, on a stated date and time. If nothing else happens, the property is sold at the trustee sale auction twenty-one (21) days from the Notice of Sale.
Bankruptcy filings provide homeowners an “Automatic Stay,” which prevents creditors from proceeding with the foreclosure and trustee sale.
The type of bankruptcy will partially determine the relief the homeowner gets from the foreclosure. In Chapter 7 cases, the stay preventing the foreclosure only lasts as long as the Chapter 7 case is open, which is typically 3 months. In Chapter 13 cases, the homeowner can choose to pay back the back amount over a period of up to five (5) years (while also making the regular loan payments). In certain Chapter 11 cases, homeowners are able to rewrite the entire term of the loan, as long as the property is not the homeowner’s primary residence.
However, the lender has the right to attempt to obtain “relief from the automatic stay.” This means that the lender wants to obtain its right to foreclose on the bankruptcy, even though the case is still pending in the bankruptcy court. The banks can obtain such relief in certain situations, including a failure to make the regular mortgage payments.
If you are experiencing an issue with foreclosure, contact the Henshaw Law Office today to see if we can help prevent the loss of your property.