We are frequently ask if a Chapter 7 bankruptcy stops the sheriff sale. The answer to this question is “yes.” Chapter 7 does stop sheriff sales. However, Chapter 7 only stops the sheriff sale for a limited period of time.
The purpose of Chapter 7 is to get a fresh start from your debts. In Chapter 7, there is no built-in mechanism for dealing with a behind mortgage. Although the Chapter 7 filing will stop a sheriff sale for a limited period of time, eventually (usually in 3 to 6 months or greater) the sheriff sale likely be reset for a future date.
Chapter 7 can stop a sheriff sale while getting rid of excessive amounts of debt. However, because Chapter 7 does not fix the mortgage situation, a loan modification or other agreement with the mortgage company must also be pursued in order to save your home. Chapter 7 is not designed to re-organize your debts and create all-inclusive solutions like the Chapter 13.
Chapter 13 both stops the sheriff sale and has a built in mechanism for bringing your mortgage back up to date. Therefore, if you are attempting to stop at sheriff sale, Chapter 13 may be a better choice in behind-mortgage situation. Chapter 13 can fix the entire mortgage and debt situation.
The primary question in a Chapter 13 is whether you will be able to afford your plan payments. There is no question as to whether the sheriff sale can be stopped through Chapter 13. The only question is whether you can afford to pay both the ongoing mortgage payment and the entirety of your arrears. A Chapter 13 filing used to stop at sheriff sale can be much more expensive monthly than what is achievable sometimes through a loan modification.
In Chapter 13, the entirety of your arrears must be paid through the plan. Your arrears will not be put on the “back of the loan.” Therefore, a Chapter 13 payment to save your house is usually always more expensive monthly than if a loan modification payment amount can be negotiated.
If you are facing a sheriff sale, the only forceful remedy you may still have available is bankruptcy. If you would like to talk to somebody about stopping a sheriff sale, feel free to give her office a call. We will book you for a free consultation.