How late can you file bankruptcy and stop a foreclosure sale?
My firm represents Maine homeowners in trouble. A common question is: how late is too late to save my home from a foreclosure sale? When is the last moment you can file a petition and stop sale? Thankfully for homeowners in distress it ain’t over until it’s over! You can file for bankruptcy right up to the day of sale and save your home from foreclosure. Chapter 13 can be used to stop the sale and cure any defaults.
Chapter 13, unlike Chapter 7, allows you to not only stop the sale but cure any defaults, to include any payment arrears, right up to actual sale. Section 1322 (c) (1) states “until such residence is sold at a foreclosure sale that is conducted in accordance with applicable non-bankruptcy law.” In Maine that means you have until there is a proper sale conducted by the mortgage holder.
This is an incredibly powerful tool for debtors! Under Maine law the homeowner has 90 days after the foreclosure judgment to “redeem” the property – meaning pay the full amount of the debt. How likely is that going to happen?! After the 90 days pass the homeowner is consider to have lost his or her rights to the home. Bankruptcy overrides Maine law and provides additional time to save the home.
Stopping the sale is not enough. Once in bankruptcy, the homeowner has options to save the home:
- Payment defaults (to include attorneys’ fees and other costs) can be cured over a reasonable time.
- The homeowner can seek a loan modification if mortgage payments are unaffordable.
- If the homeowner later experiences a change in circumstances then he or she can seek to sell the home in bankruptcy.
- The homeowner can challenge any unreasonable fees or charges by the mortgage holder in bankruptcy.
This is just a quick down and dirty explanation of how long you have to stop a foreclosure sale. The big takeaway is that if you have options if your home is in foreclosure.
If you or someone you know is a homeowner in trouble, bankruptcy may be an option. I am available to answer any questions you may have about foreclosure defense or bankruptcy. You can call my office at 207-299-0515 or using my contact form.