Depending upon a person’s intentions and foresight, continuing a trustee sale of one’s home can mean different things to different people, since just because a foreclosure is temporarily continued does not mean it will be permanently averted. An individual facing foreclosure may be tempted to file an emergency bankruptcy in order to postpone the auction date a month or two so they can borrow money or sell assets to generate cash to bring their loan current. After all, their home is the security of their family. But this may be a huge mistake if there is no backup plan. One should have a “Plan B” in case they are unable to execute on their short term plan to save their property and ultimately end up needing more time.
Stopping Sale for a Short Time
Frequently a client will call our law office and ask if an attorney can continue a trustee sale of their home for 30 days by filing a bankruptcy. Why would someone want such an extremely short term solution to a serious matter involving the threatened loss of their home? Usually the client will express that they are in distress and simply need a little more time, often asking for just a month or two, in order to be able to borrow funds or sell cars or personal items and thereby generate enough cash so they can bring their loan current. The problem with this type of a short-term solution is that it is risking the loss of one’s property on the hope that everything will go exactly as planned. There is no back-up plan. As most people know, things don’t always happen the way we want them to. What if more time is needed? What if you cannot bring your loan current within a couple of weeks or months?
Stopping Sale Permanently
Let’s say you are up against a sale date in 10 days from now. You may have had an idea for getting current on your home loan, such as selling a car or other assets to generate funds to bring your loan current. If your plan works out exactly as you had envisioned it, all will be fine. But if your plan does not work out as you hoped or takes a little longer than what you had assumed. After a couple of months when your emergency bankruptcy case is dismissed, your home will be auctioned off and sold. You will suffer the devastating loss of your property, the security of your family and perhaps a home that has great sentimental value to you.
Similarly, you may plan to borrow money from a trusted friend or family member who has already given you their promise that they will be able to help you. But unforseen circumstances in that person’s life such as a loss of a job or medical issue may prevent them from being able to follow through on their word. Conventional wisdom tells you that you can never guarantee that you will receive money until it is in your hand or your bank account.
The permanent solution for stopping a sale, which also will serve as your back-up plan, is to file a Chapter 13 bankruptcy, a federally structured repayment program, and propose a payment plan that will bring your loan current. Here’s how it works. As long as you file before the trustee’s sale date the foreclosure is stopped. Then in your Chapter 13 case, as long as you repay the past due payments by making plan payments to the Court, and otherwise do what is required by bankruptcy law, you will permanently avoid a foreclosure and save your home. Of course this all assumes that you otherwise qualify for Chapter 13 relief, something that an attorney must determine during a consultation.
If You Change Your Mind
The final thing to note about Chapter 13 cases filed to stop a trustee sale is that you can change your mind and dismiss the case at any time. By filing, you are not bound to stay in the case. So if after a couple of months you are able to get current on your mortgage and no longer want or need bankruptcy protection to protect your property, your attorney can dismiss your case immediately and you will no longer have to make plan payments to the Court.