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If you have waited to the last
minute, it can essentially be a race to the
courthouse(s).
Your bankruptcy attorney will be racing to the federal
courthouse (via computer these days) to file the
petition for bankruptcy, before the lender's attorney
completes the auction of your property at the county
courthouse.
It is not uncommon to actually have to check the time
stamps on the two documents.
Yes - In most states, they are required to auction off
your home at the courthouse steps to the highest bidder.
This keeps the lender from having a "windfall" when
there is equity in the property.
Generally when you see a foreclosure sale taking place
at the property, there were no bidders at the
courthouse, and the bank got-the-property-back. At this
point it is actually an REO sale (the true foreclosure
already happen), but they often call it a foreclosure
sale because it attracts more buyers.
If you do have to file bankruptcy to stop the
foreclosure proceedings, you will probably need the
assistance of an attorney as it can be a complicated
process.
There are basically two types of personal bankruptcy -
Chapter 13 and Chapter 7. When you file either of them
the "automatic stay" is considered to be in force
immediately. Even if the lender continues with the
foreclosure sale, it will not be a valid sale. This is
not uncommon if the bankruptcy is filed at the last
minute. The person actually doing the foreclosure may
not be notified until after they have completed the
sale. If they record a foreclosure deed in this
situation, they will be required to file some type of
corrective document in the land records stating that the
sale and subsequent deed are not valid.
The automatic stay simply directs your creditors to
cease their collection activities immediately. This
includes stopping the foreclosure sale of your property.
This is just the beginning of the bankruptcy process and
should only be considered if all other options have been
exhausted, but it will typically stop the pending
foreclosure of your house. |
