The automatic stay is the hallmark of bankruptcy, so when the judge lifts the stay to permit a lender to foreclose, we tend to think the curtain has come down on our client as homeowner. Well, maybe not, or at least, not yet.
In some cases, the road to foreclosure seems to be a wandering path rather than an expressway. Case in point: I have seen cases where the notice of default, (the first step in the statutory foreclosure process) was not recorded until six months after relief from the automatic stay was granted by a bankruptcy judge.
Those six months are months the clients lived payment free in the house. They continue to try to wend their way through the lender’s loan modification process. Even if they aren’t successful in getting a modification, it will be at least another 4 months before the lender can hold a foreclosure sale.
If you are caught up in a foreclosure situation, don’t assume that you must leave your home immediately. Some folks have been able to live effectively rent-free for many, many months, even those who have filed relatively simple Chapter 7 bankruptcy cases.
By Doug Beaton