How Late Is Too Late to Stop a Foreclosure With Chapter 13 in Oklahoma?

22 minutes ago

4 min read

People call me about a foreclosure at every stage. Some have a letter from the mortgage company. Some have been served with the lawsuit. Some call with a sheriff’s sale set for Thursday. The question is always the same: is it too late?

Usually it isn’t. But there is a point where it is, and you should know which side of it you are on.

How a foreclosure moves in Oklahoma

Oklahoma foreclosures go through the courthouse. The lender files a lawsuit and gets a judgment. Then it asks the sheriff to sell the property. Notice of the sale has to be mailed to you at least ten days ahead and published in a newspaper, and the sale cannot be held until at least thirty days after the first publication. 12 O.S. § 764.

After the sale, the lender goes back to the judge for an order confirming it, and you are entitled to notice of that hearing at least ten days before it happens. 12 O.S. § 765. Once the judge confirms the sale, the sheriff issues a deed to the buyer.

That gives you four markers: the lawsuit, the judgment, the sheriff’s sale and the confirmation.

Before the judgment

This is the best time to act. A Chapter 13 filing puts the automatic stay in place and the lawsuit stops where it stands. 11 U.S.C. § 362(a). You go back to making your regular monthly payment, and the payments you missed are spread across a three to five year plan. 11 U.S.C. § 1322(b)(5). The earlier you file, the smaller the past-due amount, and the smaller your plan payment.

After the judgment, before the sale

Chapter 13 still works. A foreclosure judgment does not end your right to catch up. Filing stops the sheriff’s sale, even when the sale date is already set.

Filing the morning of the sale still stops it, but that leaves no room for anything to go wrong. You have to finish a credit counseling course before the case can be filed. 11 U.S.C. § 109(h). I need your income, your debts and the foreclosure papers to prepare the petition. A week is workable. A day is a scramble.

After the sheriff’s sale

This is where the line is. The Bankruptcy Code lets a Chapter 13 plan cure a default on your home “until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law.” 11 U.S.C. § 1322(c)(1).

In Oklahoma a sheriff’s sale is not finished until the judge confirms it, so there is a short stretch between the sale and the confirmation hearing. What can still be done in that stretch depends on the facts of your case. If your house sold last week and the sale has not been confirmed, call today. Do not wait for the hearing.

After confirmation

Once the sale is confirmed and the deed is issued, Chapter 13 cannot bring the house back.

Bankruptcy can still matter. If the house sold for less than you owed, the lender can ask the court for a deficiency judgment for the difference, and it has to ask within ninety days of the sale. 12 O.S. § 686. That is a debt bankruptcy can deal with. Losing the house and then being garnished for the shortfall is the worst outcome, and it is avoidable.

Two things that shorten your time

If you had a bankruptcy case dismissed in the past year, the automatic stay in a new case ends after thirty days unless the court extends it. 11 U.S.C. § 362(c)(3). If you had two or more dismissed in the past year, the stay does not go into effect at all when you file. 11 U.S.C. § 362(c)(4).

That is why filing a quick case to buy a month, letting it get dismissed and filing again is a bad plan. Each dismissed case makes the next one weaker. If you have filed before, tell me at the start.

Land and manufactured homes

The rule above is about your principal residence. Land you do not live on, and a manufactured home financed apart from the land it sits on, can still be handled in a Chapter 13, but the rules are different and so is the timing. I look at those case by case.

What to do now

If you have been served with a foreclosure lawsuit or you have a sale date, gather the court papers, your most recent mortgage statement and your last two months of pay stubs. Then call. More on how the plan works is in Can Chapter 13 Save My House or Car in Oklahoma?

Call (918) 221-6190 or request a consultation. The first consultation is free, and you will talk with me directly.

This article is general information about Oklahoma and federal bankruptcy law, not legal advice for your situation. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.