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How Much Time You’ll Get

A Chapter 7 bankruptcy takes about three months (sometimes a week or two more) from the date of filing to the date of discharge (cancellation) of your debts. Unless the judge gives the lender permission, no foreclosure sale can take place during that time.

The lender can, however, file a formal request (motion) asking the bankruptcy court to lift the automatic stay and let the foreclosure sale proceed. Lenders usually must provide at least 25 days’ advance notice of the hearing on their motion unless they get the judge’s permission to shorten that time. Generally, the lender must hire a lawyer to file the motion, so it is a relatively expensive procedure. For this reason, some lenders skip the expense, let the bankruptcy proceed and simply reschedule the sale once it’s complete. This leaves your three- to four-month delay intact.

A lender who does think it’s worthwhile to ask the court to let the foreclosure go ahead usually files a motion 30 to 45 days after you file. A court hearing on the request will be scheduled about 25 to 30 days later. Unless you can convince the court that the proposed foreclosure is illegal or that the lender hasn’t complied with state procedural requirements (see Ch. 7), the court will grant the motion and lift the stay. The lender will then be free to reschedule the foreclosure sale, probably about 15 to 30 days later.

If you have been doing the math, you’ll see that even if the stay is lifted, it makes little difference. Instead of a three- to four-month delay, you’ll have a two-and-a-half- to three-month delay. From the lender’s standpoint, it’s rarely worth it.

After the discharge, the foreclosure can proceed, and the lender will reschedule the sale. Unlike Chapter 13 bankruptcy, Chapter 7 doesn’t let you make up your missed payments over time or preserve your right to keep ownership of your house.