As the rescission recedes in the back of our minds, some borrowers are finding that unfortunately the simply owe too much to save their home in a chapter 13. The question on the minds of these borrowers is often whether filing a chapter 7 can buy them more time in their house. The answer is yes, but how much time could be limited on how aggressive the lender is. Filing a chapter 7 triggers the automatic stay which means that creditors are prohibited from engaging in collection activity including the foreclosure
process. This means that your lender cannot start the foreclosure process or proceed with a foreclosure sale. Therefore, if you are in default but a foreclosure action has not being filed then the lender has to seek the court’s permission to do so. In addition, if a foreclosure sale is scheduled then the sale has be called off until the court gives An aggressive lender will immediately file a Motion to Lift the Automatic stay. Creditors file this motion to request the court’s permission to take adverse action such as start foreclosure proceeding or repossess a vehicle. A hearing will be scheduled within forty five days of the filing of the motion. Once the automatic stay is lifted then the foreclosure sale can proceed. In terms of time, assuming you have sale scheduled tomorrow, filing chapter 7 can buy you as many as sixty (60) days in your home. The thirty to forty five days or so it takes to have a hearing plus the required standard three weeks for advertising a foreclosure sale. Some lenders will simply wait for the bankruptcy
case to be concluded instead of incurring additional costs especially with so many homeowners being underwater. I have seen this happen numerous times and homeowners are able to save thousands of dollars before the foreclosure process starts. As you can see, for a family with children struggling to make ends meet the extra month or two can comes in handy. For homeowners trying to save their homes, a chapter 13 allows you to pay off the arrears over 36 or 60 months making it more affordable. This is a brief overview of a complex legal issue and it important that you see advise from a knowledgeable bankruptcy lawyer about your particular situation. Posted by Joseph K. Githuku 410-849-9529 443-982-0475 410law.com Disclaimer: This article is not legal advice. An attorney-client relationship is not created by reading this article. Please consult a knowledgeable bankruptcy lawyer.