Understanding Bankruptcy, May 24, 2018

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Question: How long can I stay in my house if I filed a Chapter 7?
Even if you choose to surrender your home as part of your Chapter 7, the automatic stay provision of the Bankruptcy Code still protects you, at least temporarily. At some point in the near future, the mortgage company will file a motion in bankruptcy court called a Motion for Relief from Stay in which they ask the judge to lift the automatic stay so that they can pursue their state law remedies, including mortgage foreclosure and a subsequent sheriff sale.

In a Chapter 7 case where you have stated your intention to surrender your home, this motion is somewhat of a formality. Your lawyer will likely advise the mortgage company’s lawyer that you (the debtor) have “no opposition” to the motion and it will be granted. Nevertheless, the mortgage company has to follow the procedure of getting relief from the stay.

Once stay relief is granted, the mortgage company can start the foreclosure process again. Depending on where you live, this process can take anywhere from a few weeks to a several months.

So, until stay relief is granted, you can sit tight and stay in your house. Once stay relief is granted, the clock will start ticking.

Finally, if the mortgage company does nothing, the stay will remain in effect until your case is discharged and closed. At that point the stay would terminate and the mortgage company could start the foreclosure process post-discharge in State court.
Next Week’s Question: Why should I use a bankruptcy attorney?


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