I want to keep my rental property but the bank rejected my Financial Hardship Package and just filed a MOTION FOR SUMMARY JUDGMENT to accelerate the Foreclosure. The property Cash Flows on its own and I’m getting back on my feet financially. I consulted two lawyers and they recommended Chapter 11 but I forgot to ask…
Does filing Bankruptcy Chapter 11 stop the Judicial Foreclosure action if the Plaintiff just filed a Motion for Summary Judgment or does it only put it on hold?
When a person files for protection under the Bankruptcy Code, the are seeking the protection of the "Automatic Stay". The Automatic Stay prohibits any action by a creditor to collect on a debt against the Debtor. Filing for bankruptcy does stop the foreclosure.
However, the Creditor or Lender can file a Motion for Relief from Stay. This Motion allows the creditor to continue to collect on their debt - in this case, proceed with the foreclosure sale. There are different things that a party can do in order to resolve the issue with the lender. Bankruptcy is one option, loan modifications are others. If you proceed under a chapter 11 or 13 (depending upon you personal circumstances) you may be able to stop the foreclosure, "Cram Down" the mortgage on your rental property or come to another arrangement. Many Debtors come out of a Chapter 11 in a much better financial position because they were able to Cram Down the mortgages on multiple properties and obtain better financing through other entities.
A bankruptcy will stop a foreclosure so long as then auction sale has not been held.
Chapter 11 (or any form of bankruptcy) will stop the sale right up to the moment of the sale (but cutting it close is a bad idea for a variety of reasons).
Right now, most properties in the Las Vegas area cash flow quite nicely after you've modified them in Chapter 11, which will also usually provide a better deal for you than the hardship/modification programs. In fact, I am quite often able to fund the plan entirely from the cashflow for my Chapter 11 clients.
If you call my assistant Diana, we can usually get you in fairly quickly to plan.
Also, understand that there are Chapter 11s being filed in town right now by attorneys who have absolutely no idea what they're doing in Chapter 11; it is not just a "big Chapter 13;" it has its own rules and quirks.
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