Filing bankruptcy will temporarily stop a bank from foreclosing on your home. The filing of a bankruptcy petition will create an automatic stay on all collection activity. In order for a bank to continue foreclosing, it will have to file for a relief from the bankruptcy court.
The typical foreclosure process starts when you are about 2 months behind in your mortgage payments. The lender will notify the Note Trustee who will then notify you that you are in default of the terms of your loan. Typically (but not in every case) this notification will be in the form of a letter sent to your property.
The property trustee then records the Notice of Default (“NOD”) in the county in which the property is located, which starts a 90-day clock running. If the account is not paid current, the property trustee will then file a Notice of Trustee Sale (“NOS”), alerting you that the property can be sold at auction. Many properties are so “upside down” (have no equity) that few investors have shown an interest in offering the minimum bid, which is usually the amount needed to pay off the mortgage lender.
Once one of our San Diego or Orange County Bankruptcy Attorneys has filed a bankruptcy, it typically takes about a week to 10 days for the lender to receive notice. Our office, however, gives special notice to the lender and the property trustee to assure that a pending sale is blocked until the court removes the house from bankruptcy protection, which takes a little over a month to achieve.
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Bankruptcy and Foreclosure
Filing bankruptcy will temporarily stop a bank from foreclosing on your home. The filing of a bankruptcy petition will create an automatic stay on all collection activity. In order for a bank to continue foreclosing, it will have to file for a relief from the bankruptcy court.
The typical foreclosure process starts when you are about 2 months behind in your mortgage payments. The lender will notify the Note Trustee who will then notify you that you are in default of the terms of your loan. Typically (but not in every case) this notification will be in the form of a letter sent to your property.
The property trustee then records the Notice of Default (“NOD”) in the county in which the property is located, which starts a 90-day clock running. If the account is not paid current, the property trustee will then file a Notice of Trustee Sale (“NOS”), alerting you that the property can be sold at auction. Many properties are so “upside down” (have no equity) that few investors have shown an interest in offering the minimum bid, which is usually the amount needed to pay off the mortgage lender.
Once one of our San Diego or Orange County Bankruptcy Attorneys has filed a bankruptcy, it typically takes about a week to 10 days for the lender to receive notice. Our office, however, gives special notice to the lender and the property trustee to assure that a pending sale is blocked until the court removes the house from bankruptcy protection, which takes a little over a month to achieve.
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