CLIENT is 48 yrs old and operates a construction business. He also dabbles in fixer uppers to make money. His wife is an accountant and makes $5,000 a month. Business has not been good apparently. Their residence has equity of $200,000. He owes $150,000 of credit card debt which he used for business. Client has not paid his mortgage for a long time, and believe it or not, his arrear is $150,000! The foreclosure sale date is set for September 5, 2014 at 9:00 a.m. He sets an appointment to see me on August 30, 2014 then lays his problem on me. Firstly, don’t do as this client has done, waiting for a week before the foreclosure sale date to consult on how he can stop the foreclosure. Although lawyers can file a Chapter 13 case by electronic filing, there are times when the court’s computers are down. When computers are down, cases cannot be filed which means there is a real risk that you will lose your house to foreclosure if you wait until the last minute. Additionally, it puts a lot of stress on me and my staff to get the complete petition and plan filed on time under the gun of a tight deadline, and this is not a nice feeling to have. Secondly, when the foreclosure is just around the corner, don’t even imagine that there is some other effective legal way of stopping it, other than a bankruptcy. Even though state law says that a pending loan modification stops a foreclosure, in reality it does not. And suing the bank for predatory lending and asking the court to stop the foreclosure with a preliminary injunction, doesn’t really work either. The chance of getting an injunction is slim to none. Using a non-bankruptcy procedure to stop foreclosure is like going hunting for big game with a BB gun. Both of these procedures cannot be depended upon to stop a foreclosure on its tracks. Only a bankruptcy can stop a foreclosure on its tracks.
The bankruptcy has to be filed before the actual auction time. If the auction time is 9:00 a.m. of September 5, a bankruptcy filing at 8:59 a.m. on September 5 will stop the foreclosure. If the foreclosure pushed through despite the bankruptcy filing, you can file a motion in bankruptcy court to reverse the foreclosure and void the foreclosure sale. If you have a tax lien foreclosure sale, you should file your case way in advance of the sale date because complications can arise.
On the foreclosure process, the start button is the “notice of default” with a recording date. Without a recording date, it’s just a piece of paper that does nothing. The recording date is the date when the notice of default is recorded at the county recorder’s office. From this date, you have 90 days to pay up the default in full, or file a bankruptcy to stop the foreclosure. After the expiration of 90 days, creditor can set the foreclosure sale date at least 21 days after the end of the 90th day. So, if your creditor strictly adheres to this timeframe, your house can be sold off in a foreclosure 112 days after the recording date, more or less. You can still try to reverse a foreclosure in state court if creditor violated the procedural requirements on notice and service.
In this client’s case we filed his Chapter 13 the night before the foreclosure sale date, which really is cutting it too close because of client’s dilly dallying. If you really want to save your house; file your Chapter 13 at least a month before the foreclosure date. After the case is filed, we can then work on a loan modification without the fear of having a foreclosure since the bankruptcy already protects the house from foreclosure.
“Peace I leave with you. My peace I give to you; not as the world gives do I give to you. Let not your heart be troubled, neither let it be afraid.” John 14:27.
* * *
Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S Fremont Ave Mailstop 58 Bldg A-1 Suite 1125 Alhambra, CA 91803.
