How to Stop or Delay a Foreclosure

If you're facing an imminent foreclosure sale, you might be able to stop the process in its tracks by filing for bankruptcy or filing a lawsuit in the case of a nonjudicial foreclosure. If the foreclosure sale isn’t happening soon, you might be able to delay or prevent the loss of your home by filing a response to a judicial foreclosure, applying for a loan modification, or participating in foreclosure mediation (if available).

Here are some tactics for stopping or delaying a foreclosure.

File For Bankruptcy

You can stop a foreclosure immediately—at least for a while—by filing for bankruptcy. A Chapter 7 bankruptcy, if you’re eligible, will stop a pending foreclosure, but only temporarily. Unless you can work out a modification, filing for Chapter 7 bankruptcy won’t permanently save your home. (Usually, a Chapter 7 bankruptcy can save your home if you're current on the loan and you don't have much equity in the property.) However, you can delay a foreclosure, probably for a couple of months, until the foreclosing lender gets relief from the automatic stay through the bankruptcy court.

For most people, it doesn’t make sense to file a Chapter 7 bankruptcy just to get a delay in the foreclosure process. However, if you have a lot of unsecured consumer debts, you might be able to get a discharge and eliminate them through the bankruptcy process (in addition to getting some extra time to live in the property). If your goal is to retain your home, filing for Chapter 13 bankruptcy could work better. With a Chapter 13 bankruptcy, you can get current on mortgage arrearages through a three- to five-year repayment plan. You can also attempt to modify the loan as part of a Chapter 13 bankruptcy.

If you’ve filed for bankruptcy within the past year, though, the automatic stay might be limited to 30 days or eliminated.

File a Lawsuit (Nonjudicial Foreclosures)

If the lender is foreclosing nonjudicially—that is, using an out-of-court process that state law sets out—you might be able to delay or stop the foreclosure by filing a lawsuit challenging the validity of the foreclosure, accompanied by a motion for a temporary restraining order and preliminary injunction.

A few arguments that homeowners commonly use to fight a foreclosure in court include:

• failure to send a breach letter if the mortgage or deed of trust requires this step
• not complying with state or federal foreclosure and mortgage servicing laws
• failure to comply with FHA or VA guidelines governing loss mitigation procedures (if you have that kind of loan), and
• lack of standing (the right) to foreclose.

This approach won’t work, however, if the foreclosure is judicial (where the lender files a lawsuit to foreclose) because by the time a foreclosure sale is about to happen, you’ve already missed your chance to respond to the suit in court.

Respond to Judicial Foreclosure Lawsuit

If you’re in the early stage of a judicial foreclosure and the time to respond to the lawsuit hasn’t expired (usually around 20 to 30 days after you’re served notice of the suit), you can potentially delay the process by filing an answer. Raising defenses in a judicial foreclosure is easier than in a nonjudicial foreclosure because you get a chance to go in front of a judge as part of the process.

You can probably get even a bit more of a delay in the foreclosure by waiting until just before the deadline to file your paperwork. But you must be very careful not to wait too long. You might lose your rights if you don’t respond to the lawsuit or any motions the lender files in a timely manner. Also, you’ll have to serve your responses to the other parties in the case. If you decide to use this strategy to prolong a foreclosure, talk with a lawyer first to make sure you don't miss any deadlines and to ensure you follow proper procedures.

Apply for a Loan Modification or Other Loss Mitigation Option

If you’re in a foreclosure, but the sale isn’t happening soon, you might be able to delay or stop the process by applying for a loan modification or other loss mitigation (foreclosure alternative) option. Under federal mortgage servicing laws, in most cases, if your foreclosure has already started and you submit a complete loss mitigation application more than 37 days before a foreclosure sale, the servicer can’t ask a court for a foreclosure judgment or order of sale, or conduct a foreclosure sale, until:

• it informs you that you’re not eligible for any loss mitigation option and any appeal, if you get that right, has been exhausted
• you reject all loss mitigation options the servicer offers, or
• you don’t perform under a loss mitigation agreement, like by not making payments on a trial modification.

If you get approved for a loan modification, the foreclosure stops so long as you keep making the modified payments. But simply sending in an application for loss mitigation probably won’t stall the process for long if you don't qualify. Usually, a servicer has to review a complete application within 30 days and can go forward with the foreclosure when any of the three conditions listed above is satisfied. Also, the servicer generally doesn't have to review more than one loss mitigation application from you, unless you bring the loan current after applying. If you then send the servicer another application, the servicer has to review it.

Some states also have a law that prevents a foreclosure from going forward if the borrower submits a loss mitigation application or under certain circumstances. California, Colorado, Nevada, and Minnesota, for example, have a law requiring servicers to decide to grant or deny a (typically) first-lien loss mitigation application before starting or continuing a foreclosure. You must submit your application by a certain deadline to get protection from foreclosure under these laws. In Minnesota, state law also gives borrowers the right to delay a foreclosure sale by either five months or 11 months, depending on the circumstances.

Attend Foreclosure Mediation (If Available)

Some states and courts offer homeowners in foreclosure the opportunity to participate in mediation or settlement conferences. These kinds of programs usually involve a meeting between the lender (or servicer), the borrower, and a neutral mediator. The parties get together and try to resolve the situation, like with a modification or another option, like a short sale or deed in lieu of foreclosure. Typically, the foreclosure process stops while mediation is taking place.

Ask for a Postponement

Another option is to contact your loan servicer and ask them to postpone the sale date. Usually, the servicer won't reschedule the sale, but it doesn't hurt to ask.

Getting More Help With Foreclosure

If you're in foreclosure and thinking about using any of the options discussed in this article to stop or delay a foreclosure, consult with a local foreclosure attorney or bankruptcy attorney to learn more about your rights and options. To learn more about applying for loss mitigation, consider also talking to a HUD-approved housing counselor.