Fort Lauderdale Foreclosure Sale: How Does Bankruptcy Stop My Foreclosure Sale?

On behalf of Bankruptcy Law Firm of Clare Casas on Saturday, August 7, 2010.

As a Fort Lauderdale bankruptcy attorney, I often meet with homeowners who are facing a scheduled foreclosure sale. During their free consultation, the main question they have is “how will a bankruptcy stop the sale of my home?” There are a couple of options available under the bankruptcy laws on how to stop a foreclosure sale.

First, either a Chapter 7 or a Chapter 13 bankruptcy filing will invoke an “automatic stay” and stop a foreclosure sale from happening as long as you file the bankruptcy case with enough time to submit a Suggestion of Bankruptcy notice to the Clerk of Court that is conducting the sale. Although you could technically show up the morning of the sale and do this, that’s never a good idea. You should try and file your case at least 2-3 days before the sale to allow time to notify the Clerk’s office of the bankruptcy filing. Ideally, you should file your bankruptcy case at least a week before but if all you have is a few days, it will suffice.

A Chapter 7 bankruptcy filing will stop the sale for you and eliminate all your debts, but it probably won’t do much towards saving your home. After the case is over and the automatic stay is lifted, the foreclosure proceeding will start up again and a new sale date will be scheduled.

In a Chapter 13, aside from stopping the sale, you also have a couple of options that might help you stay in your home long term. In a Chapter 13, you can submit a repayment plan to the court that includes your mortgage arrearages (all the money that you’re behind in your mortgage) and your current mortgage payment. The banks are forced to take your payments over three to five years and allow you to catch up with your mortgage. If you complete your plan, at the end of the repayment period, you are current with your mortgage and your payment goes back to what it was before you fell behind.

In Broward County, the Chapter 13 trustee, Robin Weiner, is working diligently towards offering a loan modification program within Chapter 13. Due largely to her efforts in bringing the lenders and debtor attorneys together to agree on guidelines that are acceptable to everyone, homeowners will soon be able to apply for HAMP modifications through mediation during the Chapter 13 process. Certain restrictions apply for this program but it’s a great opportunity for Chapter 13 filers to speak directly with their lenders and see if they can get their mortgage modified. More on this later.