As a Woodstock, Georgia bankruptcy attorney, I’ve seen several instances where a debtor either filed bankruptcy and still immediately lost their home to foreclosure or wrongly assumed he could file bankruptcy to stop a foreclosure and then realized he could not.
Both of these situations emerged only because the debtor had at least one previous recent bankruptcy case that went bad. This is because if it was the debtor’s first case filing, he would have certainly been entitled to the automatic stay to stop the foreclosure sale.
So why might a debtor not be able to stop a foreclosure even when filing bankruptcy? The answer is the times when the debtor’s filing does not come with automatic stay protection. That occurs when the debtor is what is known as a “serial filer,” because he has had two previous cases pending within a calendar year.
So while the debtor can file a case at that point in time, the stay protection does not come with it. Therefore, despite the filing, the bank is still free to foreclose without bankruptcy court permission.
I have in fact had several cases where the debtor filed his third case pro se (without an attorney) and came to me to ask why the sale was not canceled. While I could still continue the case as their attorney, I could not unwind the sale, as it was valid under the bankruptcy code.
The other scenario where a filing will not be able to stop a foreclosure is where the debtor is currently barred from filing under 11 USC 109(g). For this to occur, the debtor’s previous bankruptcy case must have been dismissed for some reason, and the order of dismissal barred the debtor from filing for the next 180 days.
Should this order be in effect, the debtor’s filing in that time window would be invalid and therefore the foreclosure case could proceed. This is true despite the fact the debtor has the present ability to fund a Chapter 13 repayment plan.
Peter Bricks is a member of the National Association of Consumer Bankruptcy Attorneys (NACBA), and contributes regularly to BankruptcyBlog.org. He has Georgia bankruptcy attorney offices in Cumming, Jonesboro, Dunwoody, Atlanta, and Woodstock.