I have filed for bankruptcy and indicated my intention to surrender the property. When do I need to move out of the house?
You can move out at any time. Take whatever steps you want, such as canceling the utilities, shutting off the water, etc. but do lock up the house for security. You can call or write the lender(s) and tell them you have moved out, if you want. In any case, the banks will go ahead and take steps to sell the house in foreclosure, take legal possession of the property, and change the locks themselves.
What if I need more time? How long can I stay?
If you need more time, our office can help you to monitor the legal steps taken by the lender to take back the property, so that you know where you are in the process. However, you will be charged according to our hourly rate and $1,000 deposit will be required for the work. Otherwise, if you want to monitor the situation yourself, the legal steps are described below.
What are the legal steps in the process for the lender to take back the house?
Once the bankruptcy case is filed, the “automatic stay” goes in effect stopping all creditor action. To take back the house, the lender must file a “lift stay” motion asking the court for permission to take its collateral back. It usually takes about 30-45 days for the lender to get this permission from the court. Once the lender has permission, then it must re-start the foreclosure, which will take no less than another three weeks. You may get a notice for the foreclosure sale date. The important language to look for in a notice of foreclosure is a specific date, time (down to the very minute), and a location for the auction in front of the courthouse for the county in which he property is located. Finally, after the sale is done, and you are still inside the property, the lender must file a lawsuit in state court to get an order to evict. The summons in the eviction lawsuit will show a date for the court hearing which is about 30 days out. After the hearing, a court order will issue for the eviction. In summary, it will take about three months after the bankruptcy filing before you must leave or be evicted.
I am scared. Can I be thrown out of the house without warning?
No. The occupant of a dwelling cannot be physically removed without court process. Once sold, the new owner cannot use self-help to remove belongings or change the locks of residential building. He must serve a summons on the occupant to come to court and go before a judge to explain before an order can be issued by the judge for eviction.
Edward Gonzalez is a bankruptcy and tax attorney in Washington, DC. Mr. Gonzalez is also a member of the Law Guru Attorney Network.