Using a bankruptcy filing to slow foreclosure proceedings
On behalf of The Rollins Law Firm posted in Foreclosure on Thursday, October 10, 2013.
Some Mississippi residents who face foreclosure on their homes and assets have considered a bankruptcy filing as a way to stave off the process and find more time to earn the necessary funds. This is an effective delaying tactic, though it will only provide some time. The foreclosure process will be suspended by law through a process called the "automatic stay."
How effective the automatic stay will be at stalling the foreclosure depends on how often the filer has declared bankruptcy. If they have not filed bankruptcy before in the last twelve months, then the stay will last anywhere from six to twelve weeks. However, if they have partaken in the filing of bankruptcy protections within the past year, then the stay will only be for one month. After that there is no stay whatsoever, and they have to call a short notice hearing to remain on the property.
Any sale on the property will be cancelled at the time of the filing, but that does not mean that the foreclosure process needs to begin again. Once they are notified of the bankruptcy, the lender will motion the court to proceed against the property. Then, there will be a hearing date, often about thirty days after the motion is filed, where the judge will grant an order from the court for them to remove the property from the protection of bankruptcy. This can take as much as a week, but after it is over, the property will be rescheduled for sale.
It can be a good idea to discuss relocation assistance with the lender. Many institutions will disburse a few thousand dollars in order to clear the property quietly. This is a much better situation for most foreclosed people than an eviction, which will affect their credit adversely. Contacting a lawyer for those facing foreclosure may be an excellent idea to in order to receive more cogent legal advice.
Source: Fox Business, "File Bankruptcy to stall foreclosure?", Justin Harelik, October 02, 2013