Sheriff Sale Approaching Fast? Stop It By Filing Chapter 13

Filing for Chapter 13 bankruptcy can indeed stop a sheriff’s sale, thanks to the automatic stay that comes into effect upon filing. The automatic stay is a powerful legal injunction that immediately halts most creditors’ collection efforts, including foreclosure and subsequent sheriff’s sales. Here’s how the process generally works:

1. Understanding the Automatic Stay:

• When you file for Chapter 13 bankruptcy, the court immediately issues an automatic stay. This injunction prevents creditors from continuing with collection actions, including foreclosure sales.
• Creditors are typically notified of the bankruptcy filing and the automatic stay by the bankruptcy court. However, if a sheriff’s sale is imminent, it’s crucial to inform the sheriff’s office and the foreclosing lender’s attorney about the bankruptcy filing to ensure the sale is halted.

2. Filing for Chapter 13 Bankruptcy:

• To stop a sheriff’s sale effectively, you must file for Chapter 13 before the sale occurs. Once the sale is complete, Chapter 13 bankruptcy typically cannot reverse it.
• Chapter 13 bankruptcy involves proposing a repayment plan to pay back all or a portion of your debts over a three- to five-year period. This plan must be approved by the court and is designed based on your income, debts, and expenses.

3. Addressing the Mortgage in Chapter 13:

• In your Chapter 13 repayment plan, you can include the past-due mortgage payments (arrears) and propose to catch up on these over the life of the plan while continuing to make your regular mortgage payments.
• Chapter 13 can provide a structured way to save your home from foreclosure by allowing you to spread out the missed payments over an extended period, making it more manageable to become current on your mortgage.

4. Legal Assistance:

• Given the complexities involved in filing for Chapter 13 bankruptcy and stopping a sheriff’s sale, it’s highly advisable to seek assistance from a bankruptcy attorney. An attorney can help ensure that your bankruptcy petition is filed promptly and correctly and that your proposed repayment plan is feasible and complies with bankruptcy laws.

5. Post-Filing Compliance:

• After filing for Chapter 13 and stopping the sheriff’s sale, it’s crucial to comply with the terms of your repayment plan. Failing to make plan payments can lead to the dismissal of your bankruptcy case, which could allow the lender to proceed with foreclosure.

Filing for Chapter 13 bankruptcy can be an effective way to stop a sheriff’s sale and address mortgage arrears, but it requires timely action and adherence to the subsequent repayment plan. By understanding the process and seeking appropriate legal counsel, homeowners can utilize Chapter 13 bankruptcy as a tool to avoid losing their homes and work towards regaining financial stability.

Chapter 13 Bankruptcy