Foreclosure is a harsh legal process and, when you are threatened with foreclosure, you should immediately try to obtain legal help. Foreclosure can move very quickly. One advantage of exercising your legal rights is that you can slow down the process. In the short term, delay can be helpful because it will give you more time to put into place a long-term solution to the problem. You cannot properly delay foreclosure just because you need more time. The actions you take must be based on some underlying legal claim or defense which is raised in good faith.
Procedural Defenses May Delay the Process. Lenders are sloppy in their procedures and sometimes do not comply with pre-foreclosure requirements. Lender errors can be to your benefit when you are contesting foreclosure, forcing the lender to start over, or, at the very least, forcing the lender to comply with procedural requirements. This will provide you with additional time to refinance, sell privately, or arrange a workout agreement.
- Examples of possible defenses include failure to give you the proper notice, failure to give you a fair chance to correct the default, failure to properly advertise the sale, failure to introduce the original documents in the foreclosure proceedings, failure to sue all the proper parties, failure to bring the foreclosure proceeding in the name of the real mortgage holder, or discouraging bids at the foreclosure sale.
A Chapter 7 Bankruptcy May Create a Temporary Delay. Filing a chapter 7 bankruptcy case will delay a foreclosure because the automatic stay in the bankruptcy case will temporarily prevent the foreclosure process from continuing. The lender cannot continue foreclosure without permission of the court (this usually takes at least sixty days) or until the case is over.
Filing a Chapter 13 Bankruptcy Stops a Foreclosure Permanently. A chapter 13 bankruptcy allows you to cure a default or pay off a mortgage in installment payments over time rather than having to come up with a lump sum. The “automatic stay” is the primary reason bankruptcy is such a powerful method of dealing with foreclosure. The filing of your petition in bankruptcy automatically stops most creditor actions against you and your property, including foreclosure, foreclosure sales, and the filing of liens against your property.
- Chapter 13 provides a means to force lenders to accept deferred payments sufficient to cure the delinquency over 36 to 60 months.
- The effect of a successful cure through a completed chapter 13 plan is to restore the homeowner to the same position as if the default had never occurred.
