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Miami Bankruptcy & Criminal Attorney / Blog / Chapter 13 Bankruptcy / Will an Automatic Stay in Bankruptcy Stop the Sale of My House?

Will an Automatic Stay in Bankruptcy Stop the Sale of My House?


One of the key benefits of filing for bankruptcy is the automatic stay. This puts an immediate halt to any debt collection activity on the part of your creditors until the bankruptcy court has a chance to review your petition. This includes any foreclosure proceedings on your home or other real property.

A stay is not a permanent remedy. Your creditors may seek “relief” from the stay to continue with their collection activities. And if the judge thinks you are acting in bad faith or not following the rules governing bankruptcy, the stay may be lifted or annulled.

Miami Judge Refuses to Help Debtor Who Literally Waited Until the Last Minute to File for Chapter 13

A recent decision from a federal judge here in Miami, Lord v. True Funding, LLC, provides a helpful cautionary tale on this point. This case involves a Florida debtor who was facing foreclosure on her house. To be more precise, a state court entered a foreclosure judgment against the debtor nearly four years earlier. But the actual sale of the property was “canceled and rescheduled nine times,” according to court records, with five of those cancellations made at the debtor’s request.

The state court, understandably losing patience, declared in a February 2019 order that it would not permit any further delays. The judge set the final date of the foreclosure sale for May 29, 2019, at 9 a.m. Two minutes before the sale, at 8:58 a.m., the debtor filed a Chapter 13 bankruptcy petition in federal court. But she did not inform the state court of this fact until 9:26 a.m., by which time the foreclosure sale had taken place. A third party bought the debtor’s property for approximately $294,000.

A few weeks later, the bankruptcy court dismissed the debtor’s Chapter 13 filing because she failed to file some of the necessary paperwork. Nevertheless, the debtor sought to vacate the foreclosure sale, alleging it violated the automatic stay. The state court put off ruling on that motion until the federal court had a chance to determine what effect, if any, the automatic stay had in this matter.

The bankruptcy court held a non-evidentiary hearing, at which time it annulled the stay and reopened the Chapter 13 case. In plain terms, the judge effectively validated the foreclosure sale. The debtor then appealed the bankruptcy court’s ruling to U.S. District Judge Robert N. Scola, Jr.

Judge Scola, however, agreed with the bankruptcy court’s handling of the case. The debtor’s main complaint on appeal was that the bankruptcy court annulled the stay without first conducting an evidentiary hearing. Scola said no such hearing was required under federal law. And even if such a hearing was necessary, the debtor never asked for one. Furthermore, Scola said the “totality of the circumstances” justified granting relief from the automatic stay. The judge noted the debtor’s foreclosure case dragged on for years, and she waited until 2 minutes before the sale to file for bankruptcy. Scola concluded this was a situation where the debtor did “too little, too late” to protect herself.

Speak with a Florida Bankruptcy Attorney Today

If you are behind on your mortgage or other debts, you need to be proactive in seeking a solution, which may include filing for bankruptcy. But please do not wait until 2 minutes before your house is sold at auction. Give yourself sufficient time to work with a qualified Miami Chapter 13 bankruptcy lawyer who can help you develop a plan of action. Contact the Law Office of Julia Kefalinos today at 305-676-9545 to speak with someone right away.



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