October 2, 2007
If you choose to surrender your home in a Chapter 7, when do you have to move out?
I received this very relevant question in an email:
My husband and I filed chapter 7 and had our meeting of creditors on sept. 12,2007. We included our mortgage in bk. How will we know when we need to be out of here? We dont want to get a knock at the door from the sheriffs dept. What is the next step. We would like to stay here as long as we can to save some money. Thanks Christy
Here is my response: Even if you choose to surrender your home as part of your Chapter 7, the automatic stay provision of the Bankruptcy Code still protects you, at least temporarily. At some point in the near future, the mortgage company will file a motion in bankruptcy court called a Motion for Relief from Stay in which they ask the Judge to lift the automatic stay
so that they can pursue their state law remedies.
In a Chapter 7 case where you have stated your intention to surrender your home, this motion is somewhat of a formality. Your lawyer will likely advise the mortgage company’s lawyer that you (the debtor) have “no opposition” to the Motion and it will be granted. Nevertheless, the mortgage company has to follow the procedure of getting relief from the stay.
Once stay relief is granted, the mortgage company can start the foreclosure process again. Depending on where you live this process can take anywhere from a few weeks to a few months.
So, until stay relief is granted you can sit tight and stay in your house. Once stay relief is granted, the clock will start ticking.
Finally, if the mortgage company does nothing, the stay will remain in effect until your case is discharged and closed. At that point the stay would terminate and the mortgage company could start the foreclosure process post-discharge.