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Stopping the Foreclosure Sale

Foreclosure Home For Sale Sign in Front of Large House

At the end of the foreclosure process in New York the home is scheduled to be sold by a court appointed referee. If you find yourself in this situation what do you do? The homeowner usually receives notice approximately 30 days before the house is sold. In some situations the homeowner only has several weeks to stop the foreclosure sale.

Legal Action to Stop the Foreclosure Sale

There are two avenues a homeowner can proceed to stop their families’ home from being sold. The first option is to bring an emergency order to show cause in the state court where the foreclosure case is pending. When this order to show cause is brought it requests the judge enter a court order stopping the foreclosure sale from going forward. However, it should be noted this is discretionary with the judge and the judge can turn down this application.

The second route to stopping a foreclosure sale is to file a bankruptcy in the United States Bankruptcy Court. The filing of a bankruptcy, whether it is a Chapter 7, Chapter 11 or Chapter 13 bankruptcy, guarantees the federal court will issue a stay ordering the state court, where the foreclosure is pending, to stop the sale from moving forward. After the bankruptcy is filed the attorneys for the homeowner serve the court order from the federal court on the attorneys for the financial institution and the referee appointed by the court to sell the home.

Chapter 13 and Chapter 11 Bankruptcies

Chapter 13 and Chapter 11 bankruptcies involve the reorganization of the debt of the homeowner. Plans are established to allow the homeowner to catch up on the mortgage arrears over a period of five (5) years or less. A Chapter 7 bankruptcy is also known as a straight bankruptcy. It simply eliminates or discharges the mortgage debt completely.

The best way to evaluate whether to proceed with an order to show cause in state court or one of the three (3) potential bankruptcy filings is to meet with a foreclosure lawyer as soon as you receive notice your home is going to be sold at auction. At a minimum an experienced foreclosure defense lawyer will be able to provide you with peace of mind and explain how the legal process is working in your case.

Frequently Asked Questions

  • Did your bank have the right to foreclose your home? This question cannot be answered with a simple yes or no. It is common for the bank that underwrites your mortgage to sell the mortgage to another bank. Then sometimes the second bank sells it to a third bank. Whether the bank foreclosing on you home has standing to bring a foreclosure lawsuit is a question that requires an investigation to ascertain whether the bank actually has the ability to foreclose on your home. The legal issue is referred to as standing to bring a foreclosure lawsuit.
  • What alternatives does a homeowner have when faced with foreclosure? If the homeowner is served with a summons and complaint he or he must initially prepare and file an answer to the foreclosure complaint with the court and the bank’s attorney and appear in court for scheduled court appearances before utilizing any of the other options. In addition, the homeowner could apply for a loan modification. The homeowner can bring the arrears current by paying them and/or the homeowner can enter into a forbearance agreement. In addition, the homeowner can file either a Chapter 7 or Chapter 13 bankruptcy. A short sale or deed in lieu are foreclosure additional options available to homeowners. The best way to ascertain what the homeowners best option is is to consult with an experienced foreclosure defense attorney as soon as possible.

Valley Stream, Lynbrook, Baldwin, Malverne, Freeport, Oceanside, Long Beach, Elmont, Lakeview, West Hempstead, Hempstead, Merrick, Bellmore