Can the bank still file foreclosure, even after bankruptcy was filed?

Question

I am interested in buying a foreclosure at a trustee sale....However, when doing the title work, this individual filed for bankruptcy alittle over a year ago....I was just wondering if this is possible? Can a bank file for foreclosure, even after the individual filed for bankruptcy? I am in Texas....Thanks

Apparently this person didn't keep up his repayment plan, because tommorrow this property goes up for auction at a trustee sale...

Answer 1

You need to do some digging into the bankruptcy to be safe. If the bankruptcy was dismissed or if the lender got relief from the automatic stay, then the foreclosure can proceed.

Even if the case was discharged, it does not eliminate the bank's lien on the property. If the debtor doesn't make the payments, then the bank can foreclose. You still need to confirm the status of bankruptcy.

Answer 2

Yes, the bank can still foreclose if the person's bankruptcy case was dismissed (either with or without prejudice) for some reason (usually due to non payment or not providing documentation requested by Trustee) and never refiled. The trustee and bank would not have foreclosed otherwise and if they did foreclose by mistake, the situation would have been resolved by now.

Answer 3

Depends on which act he filed under, a structured repayment plan approved by the court would stop cold a foreclosure

Answer 4

Chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. Chapter 13 permits individuals to keep their property by repaying creditors out of their future income.

Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) due to the owner's failure to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, it is typically said that "the lender has foreclosed its mortgage or lien". A Foreclosure by Sale ends in the posting of a sign advertising the auction of the home on the sale date. The only ways to stop a foreclosure are full payment of the arrearage, or the filing of a Chapter 13 bankruptcy. Full Payment: If able to obtain and tender the full amount of the arrearage, including fees and costs, can stop the foreclosure of a standard residential mortgage. Most people lack the money to make full payment. This process stops the foreclosure and allows one to repay the arrearage over a three-to-five year period. The arrearage is paid through a court-appointed official, while resuming regular monthly payments to the bank in order to keep the home. A Chapter 13 can be filed at any time prior to the law day or sale date and it is often the only avenue to save the home. Regardless of the arrangement requested, full disclosure of all relevant details is required. If a buyer's premium is requested as part of an auctioneer's compensation, the application to employ and order must specifically describe this arrangement. If the auctioneer is going to retain the premium instead of turning it over to the trustee, the order authorizing the employment of the auctioneer must specifically authorize this procedure. Any and all other fees must be described.

In Texas, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, the property will be auctioned off to the highest bidder.

Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:
1. Prior to proceeding with a foreclosure, Texas laws state that the lender must mail the borrower a letter of demand, informing the buyer he has twenty (20) days to pay the delinquent payments or foreclosure proceedings will begin.
2. At some point after the borrowers twenty (20) days have expired, but at least twenty one (21) days before the foreclosure sale, a foreclosure notice must be: 1) filed with the county clerk; 2) mailed to the borrower at their last known address; and 3) posted on the county courthouse door.
3. The foreclosure sale must take place on the first Tuesday of any month, even if said Tuesday falls on a legal holiday, but only after the proper preliminary notices have been given. The sale is on the courthouse steps by auction to the highest bidder for cash. Anyone may bid, including the lender, who bids by canceling out the balance due on the note, or some part of it.

Lenders may obtain deficiency judgments, but they are limited to the difference between the fair market value of the property at the time of sale and the balance of the loan in default.

Answer 5

Yes the bank can file for foreclosure. How do you think they re-coup the losses.

Answer 6

If the bankruptcy was discharged and the mortgage was under the bankruptcy then no. But if the bankruptcy did not include his loan, and it was discharged, then he for example fell behind on his mortgage payments, then yes it would be forclosed.