Homeowners who are facing foreclosure due to non-payment of their mortgage have several options at their disposal to defend against the loss of their home. However, many people are under the misconception that they can just run into court and tell a judge the bank did not give them documents or does not own the mortgage (a lack of standing), and this will stop the sale of their house. While it is true that a lender must own the note and mortgage in order to foreclose in Massachusetts, this is a very complex argument to make and often times a useless exercise. More importantly, there must be enough time to get a judge to issue a restraining order to stop a foreclosure.
Although a home owner can try to negotiate a loan modification, challenge the standing of a bank to sell their home, the truth of the matter is that the only sure way to stop a foreclosure is through a bankruptcy filing. The reason for this is that unlike a challenge to the foreclosure itself where a Judge has the discretion to issue injunctive relief, after a hearing is scheduled, the filing of a bankruptcy enacts that automatic stay which stops all collection attempts dead in its tracks.
Purusant to 11 U.S.C. §362(A), once a bankruptcy case is filed, any and all attempts to collect a debt from a Debtor, including the use of a foreclosure of a home or repossession of a car, must be stopped immediately. Therefore, even if a foreclosure sale is scheduled for 9:00 AM on Monday morning, so long as a case is filed 5 minutes before the sale is finalized, and notice is given to the auctioneer, the sale cannot proceed.
Once the sale is stopped based upon a bankruptcy filing the next step that needs to be taken depends on what chapter of bankruptcy was used to enact the automatic stay. If a Chapter 7 was used then the stay will only be good for 90 days, so the homeowner must either cut a deal with the lender, enter into a loan modification or file an action in land court to challenge standing or the contract itself. If a Chapter 13 case was filed, then within 14 days of the original case, the Debtor will need to file a plan of reorganization which will propose to pay back the mortgage arears over the course of 3 – 5 years.
Prior to making the decision as to which type of bankruptcy to file, it is a good idea to speak to one of the experienced bankruptcy lawyers at the Law Office of Goldstein and Clegg. If you are facing the loss of your home, call us today to schedule an appointment at 781 595 3800 or email us using the form below: