Stop a Trustee Sale

So your bank has set a foreclosure date for your home, which is called a "trustee sale." Maybe they've been stringing you along for several months, promising to consider your loan modification request. Maybe you even thought you had a deal with them and have been making "trial period" payments. What do you do?

The lender may not give you a loan modification or agree to postpone the foreclosure date. You have several options at this point:

  1. Pay the arrearage plus penalties in full;
  2. Forfeit your home, taking the risk that you lose any value it has above what is actually owed;
  3. If you were in a Trial Payment Plan, and the lender is now foreclosing anyway, you may consider seeking a court order to stop the foreclosure;
  4. File for bankruptcy protection.

Obviously the first option is simply not possible for most people in this situation. And unless your home is definitely not worth more than you owe on it, you do not want to lose it through foreclosure. The bank is not required to sell your home at the highest price it could possibly get, and since it may simply be "buying" the property for itself, it may be unlikely to do so. Plus, the bank can always tack on fees and penalties to justify keeping whatever profit there is in the sale.

The California Homeowner's Bill of Rights may allow you to stop the foreclosure if you can show a judge that you submitted a complete loan mod application and had reason to believe your application had been approved. However, this requires filing a lawsuit in state court and there must be enough time left before the foreclosure date to get an injunction.

The last option is a Chapter 13 Bankruptcy petition. Only the Bankruptcy Code will immediately stop the trustee sale without uncertain litigation. Filing a Chapter 13 bankruptcy will do the following:*

  • Immediately stop foreclosure proceedings.
  • Give you a chance to catch up on delinquent payments.
  • Allow you to seek a loan modification while making a mortgage payment that is no more than 31% of your income after necessary expenses.
  • Eliminate your second or third mortgage if your house is worth less than what is owed on the first.
  • Give you time to sell your house for the best price you can if you find that you still cannot afford to stay in your home.

For more information about your bankruptcy options see Bankruptcy Overview.

*only filing a Chapter 13, not a Chapter 7 bankruptcy, will allow you to do all of the above.

Do not lose your home to inaction. If you are facing a trustee sale date, contact us immediately to help you determine what your best course of action is.

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