Do Emergency Chapter 13 Filings Really Stop the Foreclosure Process?

With many individuals in the state of Florida, should their homes go into foreclosure, time is not on their side. Foreclosures can be completed in as little as 37 days, inclusive of advertising the foreclosure announcement for a 4-week period in your county’s legal newspaper. In so many words, your home can literally be sold out from under you on the steps of your local courthouse. Your only viable option may be an emergency Chapter 13 filing in order to stop the foreclosure process and save your home.

The key benefit of an emergency Chapter 13 filing is the automatic stay that prevents further collection or foreclosure action. This automatic stay is what gives an emergency Chapter 13 filing so much power. With rare exception, when an emergency Chapter 13 is filed, all collection activity must cease. However, if the foreclosure process continues intentionally, there are sanctions that can be levied against that creditor for not observing the automatic stay.

The Chapter 13 automatic stay applies to the creditor even if they have not been made aware that an emergency Chapter 13 filing has occurred. As an example, if your attorney filed the emergency Chapter 13 within 10 to 15 minutes of the sale on “Foreclosure Tuesday,” the foreclosure is void and can be reversed. Despite the fact that the foreclosing lender or mortgage company may not have been made aware of the of that emergency Chapter 13 filing, the foreclosing proceedings are now void and have to be reversed.

Additionally, even if a 3rd party who bought the property in good faith is involved, they wouldn’t be entitled to an ownership claim, and the transfer of title on your home would have to be reversed. Where 2nd or 3rd party bankruptcy filings are concerned, the automatic stay protection factor may be less comprehensive. Another aspect to be aware of is that in 2005 there were amendments made to the bankruptcy code which changed the rules of the automatic stay for those individuals that are considered to be repeat bankruptcy filers.

Clark & Washington suggests that you never wait until there is only a day or two left prior to the foreclosure sale of your home for starting the emergency Chapter 13 filing. As soon as you are made aware of the foreclosure process being implemented against your home and property, you should contact us so that we can assist you in saving your home.