The Automatic Stay. The automatic stay informs your creditors that they must immediately cease any collection activities. This includes phone calls, letters, garnishments, and foreclosure activity. Even if your home was already scheduled for sale or auction, the automatic stay will be postponed while the bankruptcy is pending. The Automatic Stay: Delaying Foreclosure When you file either a Chapter 13 or Chapter 7 bankruptcy, the court automatically issues an order (called the order for relief) that includes a wonderful thing known as the " automatic stay." The automatic stay directs your creditors to Author: Cara O'neill, Attorney. Bankruptcy and foreclosure are both words that the average person dreads hearing. If you are facing foreclosure, however, bankruptcy can become a tool to help you keep your house. Once you file bankruptcy, either Chapter 13 or Chapter 7, the court automatically issues an Order for Relief.
Related videosHow To Buy A House After Foreclosure or Bankruptcy - THE EXACT PROCESS
See below. Notwithstanding directory language adding pars. Notwithstanding directory language adding par. Former par. If the hearing under this subsection is a preliminary hearing, then such final hearing shall be commenced not later than thirty days after the conclusion of such preliminary hearing. Amendment by Pub. Amendment by section of Pub. Please help us improve our site! No thank you. LII U. Code Title Automatic stay.
Code Notes prev next. B of the collection of a domestic support obligation from property that is not property of the estate;. C with respect to the withholding of income that is property of the estate or property of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute;.
E of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section a 7 of the Social Security Act ;. F of the interception of a tax refund, as specified in sections and a 3 of the Social Security Act or under an analogous State law; or. G of the enforcement of a medical obligation, as specified under title IV of the Social Security Act ;. B the issuance to the debtor by a governmental unit of a notice of tax deficiency;.
C a demand for tax returns; or. D the making of an assessment for any tax and issuance of a notice and demand for payment of such an assessment but any tax lien that would otherwise attach to property of the estate by reason of such an assessment shall not take effect unless such tax is a debt of the debtor that will not be discharged in the case and such property or its proceeds are transferred out of the estate to, or otherwise revested in, the debtor.
B a loan from a thrift savings plan permitted under subchapter III of chapter 84 of title 5, that satisfies the requirements of section g of such title;. B if the case under this title was filed in violation of a bankruptcy court order in a prior case under this title prohibiting the debtor from being a debtor in another case under this title;.
C any act taken by such securities self regulatory organization to delist, delete, or refuse to permit quotation of any stock that does not meet applicable regulatory requirements;. The provisions of paragraphs 12 and 13 of this subsection shall apply with respect to any such petition filed on or before December 31, B the time the case is dismissed; or.
C if the case is a case under chapter 7 of this title concerning an individual or a case under chapter 9 , 11 , 12 , or 13 of this title, the time a discharge is granted or denied;. B on the motion of a party in interest for continuation of the automatic stay and upon notice and a hearing, the court may extend the stay in particular cases as to any or all creditors subject to such conditions or limitations as the court may then impose after notice and a hearing completed before the expiration of the day period only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed; and.
C for purposes of subparagraph B , a case is presumptively filed not in good faith but such presumption may be rebutted by clear and convincing evidence to the contrary — i as to all creditors, if— I more than 1 previous case under any of chapters 7 , 11 , and 13 in which the individual was a debtor was pending within the preceding 1-year period;.
III there has not been a substantial change in the financial or personal affairs of the debtor since the dismissal of the next most previous case under chapter 7 , 11 , or 13 or any other reason to conclude that the later case will be concluded— aa if a case under chapter 7, with a discharge; or. B if, within 30 days after the filing of the later case, a party in interest requests the court may order the stay to take effect in the case as to any or all creditors subject to such conditions or limitations as the court may impose , after notice and a hearing, only if the party in interest demonstrates that the filing of the later case is in good faith as to the creditors to be stayed;.
C a stay imposed under subparagraph B shall be effective on the date of the entry of the order allowing the stay to go into effect; and. D for purposes of subparagraph B , a case is presumptively filed not in good faith but such presumption may be rebutted by clear and convincing evidence to the contrary — i as to all creditors if— I 2 or more previous cases under this title in which the individual was a debtor were pending within the 1-year period;.
III there has not been a substantial change in the financial or personal affairs of the debtor since the dismissal of the next most previous case under this title, or any other reason to conclude that the later case will not be concluded, if a case under chapter 7, with a discharge, and if a case under chapter 11 or 13, with a confirmed plan that will be fully performed; or.
B such property is not necessary to an effective reorganization;. B multiple bankruptcy filings affecting such real property. If recorded in compliance with applicable State laws governing notices of interests or liens in real property, an order entered under paragraph 4 shall be binding in any other case under this title purporting to affect such real property filed not later than 2 years after the date of the entry of such order by the court, except that a debtor in a subsequent case under this title may move for relief from such order based upon changed circumstances or for good cause shown, after notice and a hearing.
Any Federal, State, or local governmental unit that accepts notices of interests or liens in real property shall accept any certified copy of an order described in this subsection for indexing and recording. A hearing under this subsection may be a preliminary hearing, or may be consolidated with the final hearing under subsection d of this section.
The court shall order such stay continued in effect pending the conclusion of the final hearing under subsection d of this section if there is a reasonable likelihood that the party opposing relief from such stay will prevail at the conclusion of such final hearing. If the hearing under this subsection is a preliminary hearing, then such final hearing shall be concluded not later than thirty days after the conclusion of such preliminary hearing, unless the day period is extended with the consent of the parties in interest or for a specific time which the court finds is required by compelling circumstances.
B such day period is extended— i by agreement of all parties in interest; or. If the court does not so determine, the stay provided by subsection a shall terminate upon the conclusion of the hearing on the motion. B the debtor or an adult dependent of the debtor has deposited with the clerk of the court, any rent that would become due during the day period after the filing of the bankruptcy petition.
B If the court upholds the objection of the lessor filed under subparagraph A — i subsection b 22 shall apply immediately and relief from the stay provided under subsection a 3 shall not be required to enable the lessor to complete the process to recover full possession of the property; and.
B the clerk of the court shall immediately serve upon the lessor and the debtor a certified copy of the docket indicating the absence of a filed certification and the applicability of the exception to the stay under subsection b B The form of certification filed with the petition, as specified in this subsection, shall provide for the debtor to certify, and the debtor shall certify— i whether a judgment for possession of residential rental housing in which the debtor resides has been obtained against the debtor before the date of the filing of the petition; and.
In other words, if the property is sold at a foreclosure auction for less than you owe on it, the bank would be prohibited from trying to collect the remaining balance from you.
While a bankruptcy filing will immediately stop a foreclosure auction, there are some important limitations. If the bank wants to continue with foreclosure efforts, it must obtain permission from the Bankruptcy Court. This makes sense, and will typically be granted by the Court.
If you file a Chapter 13 case, you are required to make your regular monthly mortgage payments in addition to the monthly Chapter 13 payment. This also makes sense, and will typically be granted by the Court.
If a Motion for Relief from Stay is granted, then the bank will be permitted to resume foreclosure efforts in accordance with Massachusetts state law. If it violates state foreclosure law, you should still have the ability to file a lawsuit for it, but you would no longer be protected under the automatic stay of the Bankruptcy Court.
In fact, one of the biggest problems that consumers in bankruptcy are facing right now is lenders who are unwilling to foreclose on collateral. Until your name is officially removed from the deed to your home, either through foreclosure or by surrendering it in bankruptcy , you are responsible for insurance, homeowners association dues, etc.
There is a tremendous backlog of foreclosures in this country and, depending on your location, your lender may not have the resources to foreclose on your home for quite some time. It is possible that a Chapter 7 bankruptcy could disrupt the foreclosure process for a year or more. It is possible that it will only disrupt it for a couple months. The point to take away is this: filing bankruptcy will temporarily stop foreclosure BUT lenders have a workaround.
They can file the motion for relief from stay to get your home. Whether they choose to do this is entirely up to them. Unlike its faster cousin Chapter 7, Chapter 13 bankruptcy lasts for a period of between three to five years.
During this time, you pay back a percentage of the debts you owe to your unsecured creditors. If you file Chapter 13 bankruptcy with income that is below the median for a family of your size in your state, your Chapter 13 payment plan will be for three years. If you are like most debtors and file with income that is above the median in their state, your Chapter 13 payment plan will be for a period of five years. The automatic stay will prevent foreclosure for the length of the payment plan, either three or five years, as long as you maintain normal monthly mortgage payments during the life of the plan.
A little background: Many debtors enter Chapter 13 bankruptcy because they are hopelessly behind on their mortgage.
The bank is demanding a lump-sum payment, or series of lump-sum payments to get caught up on a past-due mortgage. Many families simply do not have the means to comply.
In order to stop foreclosure, they file for Chapter 13 because it allows for them to pay back the past-due mortgage balance over the life of the Chapter 13 plan.