Chapter 13 Bankruptcy Filing Stops Foreclosure Minutes Before The Foreclosure Sale
The Bankruptcy Laws are very powerful. When someone files for either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, they immediately receive the Automatic Stay of Bankruptcy. This means that as soon as the Bankruptcy Petition is filed, that all acts to collect debts are stayed or stopped. A Foreclosure is an attempt to collect a debt by taking away someone’s home. In Florida, once a Foreclosure Sale has been completed, the homeowner loses all rights in the home and must vacate the home within 10 days of the sale.
In this particular case, the Clients came into our office the day before the Foreclosure Sale. The home had been in Foreclosure in the Florida court system for over a year. The Clients hired a law firm in California to handle their Foreclosure. The law firm had sent them a solicitation in the mail due to the Foreclosure being a public record. Their case languished with the California law firm who made all types of promises but ultimately dropped them the day prior to the Foreclosure and told them to go file a Bankruptcy. The Clients were not even sure that they ever spoke with an attorney as they never had any face to face contact with the law firm.
When the Clients came into our office, they were distraught and filled with anxiety. Their house would be lost the very next day. Everything they had been told by both the California law firm and their own mortgage company, led them to believe that everyone wanted to help them, that their home would be saved. Most of what they were told was very misleading and full of half truths.
During the 24 hours prior to the foreclosure sale, we personally met with the Clients 3 different times in an effort to prepare the Bankruptcy Petition. We prepared an approximate 60 page document and filed their Chapter 13 Bankruptcy case just minutes prior to the Foreclosure Sale. Immediately after the filing, we contacted the State Court handling the Foreclosure, alerted them to the Bankruptcy filing, filed a Suggestion of Bankruptcy into that proceeding, and stopped the Foreclosure Sale.
As a result of the Chapter 13 Bankruptcy, we were able to force the mortgage company into the Bankruptcy and cancel the Foreclosure Sale. The Chapter 13 was filed with a Chapter 13 Plan which in this case proposed a modification or change in payment terms of their mortgage. The Bankruptcy Court has a special Mortgage Modification Mediation program which Martin Lewis helped design as a committee member years ago.
A very stressful time for our Clients has now been resolved. We are now in a court system designed to help people who have financial problems. In addition, our Clients have us, Lewis & Jurnovoy, a local law firm that they can sit down with and meet face to face to help them work through this difficult time in their lives.