Can I file bankruptcy the day before a scheduled auction and stop the proceedings?
I have not received a certified notice of sale and I just received a letter by mail this week for sale.
Yes. The automatic stay in bankruptcy is, well, automatic, so once you file your case, the injunction goes into effect preventing foreclosure or any collections activity. Of course, to avoid having to go through an expensive process to unwind an improper foreclosure sale, you need to make sure the foreclosure trustee gets notice of the bankruptcy case before the sale.
Only chapters 11 or 13 will allow you to catch up on past due amounts on the mortgage. Chapter 7 will only give you a temporary stay on the foreclosure because the creditor will simply get permission from the bankruptcy court to continue with the sale.
Mark J. Markus, Attorney at Law
Handling exclusively bankruptcy law cases in California since 1991.
bankruptcy blog: http://bklaw.com/bankruptcy-blog/
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