How a Bankruptcy Attorney Can Stop Foreclosure Sale in Los Angeles
Nothing is scarier to a homeowner than facing a foreclosure on their home. You put so much money into purchasing the home and making your mortgage payments, but then, for whatever reason, default on those payments. Then the foreclosure process begins.
An attorney filing a bankruptcy case stops the foreclosure process (see California Foreclosure information in the FAQs below). Chapter 13 and Chapter 11 bankruptcy allow you time to catch up on the past due amounts and to deal with your other debts.
But timing is critical. In my Los Angeles Area bankruptcy practice, I see too many people that wait much too long to act. And that often results in them losing their property or, having to pay much more to fix the problem than if they had acted sooner. If you are in need of assistance then contact my office today to speak with a lawyer.
California Attorney Filing Bankruptcy to Stop Foreclosure Sales
The bankruptcy automatic stay stops a pending foreclosure sale on your house (so long as you haven’t had a prior bankruptcy case dismissed within the past 12 months). It also stops any collection action on any debt. The automatic stay remains in effect until your case is completed or dismissed.
This is a very powerful tool. You definitely don’t want to wait until the last minute to avail yourself of a bankruptcy remedy. Delays greatly diminish your chances of a California bankruptcy being able to resolve your problems.
What Happens After the Foreclosure Sale Is Stopped?
Once your lawyer files a bankruptcy case and collection foreclosure actions are stopped, you have to propose a repayment plan to deal with what you owe. One of the great benefits of Chapter 13 is you can take up to 60 months to catch up on the past due amounts and reinstate your loan.
Thus, if you are behind $20,000 in mortgage payments (including penalties and other costs), you can catch up on that over 60 months with a payment of under $400 per month. And, in a Chapter 13, the mortgage creditor MUST accept that. (Chapter 11 is trickier and creditors get to vote for or against your plan).
You also must stay current with all ongoing mortgage payments that come due after your case is filed, so you need to have enough extra income beyond your regular required expenses in order for this to work.
Don’t Wait Too Long to Get Foreclosure Advice
A mistake many make is waiting until a few days prior to the foreclosure sale date to look into bankruptcy as an option.
At that point it will be difficult to find an attorney who can properly process everything in time to get your case filed on time, and you increase the likelihood of serious mistakes that way.
Wishful thinking and prayer alone will not stop your foreclosure sale from taking place by your mortgage lender.
In addition to stopping foreclosure sale on your home, Chapter 13 also allows you to remove certain judgment liens against your home in some instances as well as under secured mortgages or deeds of trust. A qualified bankruptcy attorney can explain these options to you.
There are many other options available in Chapter 13 and 11 for eliminating certain mortgage liens (sometimes fully eliminating junior liens) on both principal residences, and other properties.
Contact me now to see how an attorney can save your home and other property from foreclosure.
Los Angeles Bankruptcy Attorney Helps Stop Foreclosure Sales
I provide personalized service to all my clients in every case. Open communication is a hallmark of my representation and I promptly respond to client questions. All work is done by me, a bankruptcy lawyer, in my Burbank, Los Angeles office. No paralegals or assistants.
Bankruptcy cases are only filed by our office after weighing all alternatives and analysis of the pros and cons of filing. From knowledge comes power, and it is important to have an experienced bankruptcy lawyer review your facts and explain the pros and cons of pursuing a bankruptcy case
My initial consultations are comprehensive and thorough, which is different from most other attorneys who give very short initial consults and guesstimates as to what you can do, without having all the necessary facts. In my consultations, I analyze all relevant information, including your income, expenses, assets, debts, and other factors. That way I can answer any questions you have, and I can tell you whether you should file for bankruptcy, which chapter(s) you may be eligible for, what property/assets you can protect, and identify any problems that might arise in your case. After my consultation You will know the costs and benefits of filing a case for your personal situation.
Our firm serves many cities and counties in California, including counties of Los Angeles, Orange, Santa Barbara, Riverside, San Bernardino, Ventura, San Luis Obispo, and cities including Burbank, Glendale, Sylmar, Panorama City, Simi Valley, San Fernando Valley, Irvine, Santa Clarita, Oxnard, Huntington Beach, Ontario, Rancho Cucamonga, Corona, Torrance, Agoura, Long Beach, San Fernando, Van Nuys, Sherman Oaks, North Hollywood, Anaheim, Hollywood, Riverside, San Bernardino, Lancaster, Palmdale, Pasadena, and many more.
Frequently Asked Questions (FAQ’S) About Stopping Foreclosure In California
Which Bankruptcy Chapters Stop Foreclosure in Los Angeles, California?
Usually Chapter 13 or Chapter 11 are used to stop foreclosure sales.
Why? Because in a Chapter 13 case you can propose a Plan of repayment that catches up (cures) on the past due amounts you owe to your mortgage or other lenders against your home, over a 36 to 60 month period. Or, in a Chapter 11, you may be able to cure over a longer period.
So, for example, let’s say you are behind on your mortgage in Los Angeles and they have started the foreclosure process. The amount needed to reinstate your loan (take it out of default) is $30,000. You don’t have $30,000 handy to just pay this amount to stop the foreclosure sale. So, in a Chapter 13 you can pay that $30,000 over 60 months, which would require a payment of a little over $500 per month (there are some administrative trustee fees that get added). Of course, you must stay current with your regular monthly mortgage or other secured debt payments from that point as well. But much easier to come up with $500 per month instead of $30,000 all at once.
Plus, in some situations, you may actually be able to eliminate junior liens on your property entirely. Visit my California Chapter 13 page for more information.
Calculation of how much your payment must be depends on other factors as well. This includes your income, expenses, value of your assets and what exemptions are available, and other things. Contact me today for an analysis of your situation and to learn your options.
Chapter 7 will temporarily stop a foreclosure sale, but usually just for a month or two. Since no payments are made in a Chapter 7 case, you would need to negotiate with a foreclosing creditor outside the bankruptcy case to resolve your issues, if possible.
How Long is the California Foreclosure Process?
In California, most foreclosures are “non-judicial” meaning no court proceeding is required to foreclose on a property.
In most California foreclosure sales, the process begins with a recorded Notice of Default by the lender.
You have three (3) months from the date that Notice is recorded before the secured creditor (usually a mortgage holder) can publish a foreclosure sale date.
You then have an additional 21 days after the foreclosure sale notice goes out before the actual sale.
The best time to consult with a bankruptcy attorney is PRIOR TO OR DURING THE INITIAL 3-MONTH NOTICE OF DEFAULT PERIOD.
You can of course inquire later, but the closer you get to the foreclosure sale date, the less options you will have and the less likely it will be to succeed.
Does the Homestead Exemption Protect Against California Foreclosure Sales?
No. This is a common misconception about what the homestead exemption does. In California, the homestead exemption protects equity in your property from sales by judgment creditors. These are liens obtained by a judicial process, such as a lawsuit. However, in order for it to protect, you must record a Homestead Declaration form BEFORE the judgment lien is created.
In a standard foreclosure scenario, where a mortgage or equity line bank is involved, the homestead exemption does not apply. That is because these are voluntary liens. You agreed to have the Deed of Trust recorded against the property. That is different than a judicial lien, which is involuntary (unless you sued yourself).