Bankruptcy Automatic Stay Protection and Post-Foreclosure Proceedings

August 29th, 2010 by Reed Allmand

Has your mortgage servicer already filed a foreclosure against your property?  Has the mortgage servicer already won a foreclosure judgment for possession and is just waiting to evict you from the property?  You may still be able to reap limited and temporary protections from the foreclosure eviction after filing bankruptcy.  Here’s what you need to know:

Section 326(b)(22) of the Bankruptcy code states:

The filing of a petition…does not operate as a stay subject to subsection (l), under subsection (a)(3), of the continuation of any eviction, unlawful detainer action, or similar proceeding by a lessor against a debtor involving residential property in which the debtor resides as a tenant under a lease or rental agreement and with respect to which the lessor has obtained before the date of the filing of the bankruptcy petition, a judgment for possession of such property against the debtor.

In other words, filing bankruptcy after a mortgage servicer has successfully filed a foreclosure against your property and is in the process of evicting you will not reverse the foreclosure at this point. However, filing bankruptcy even at this point may buy the debtor more time to put their affairs in order before they are evicted.  It is important to understand that if the mortgage servicer has not won a judgment for possession before you file bankruptcy, you may still be able to save your home.  For example, if a debtor receives a notice saying that the mortgage servicer is planning to file foreclosure against the property, the debtor may still save the home if they file bankruptcy at any point before the mortgage servicer wins a judgment for possession.  Speak with a qualified Dallas-Fort Worth bankruptcy attorney to find out exactly how bankruptcy can save your home from foreclosure.