Madison Wisconsin Bankruptcy Attorney | Janesville Foreclosure & Debt Relief Law Firm | Wisconsin | WI
Bankruptcy Blog - Free Advice

Madison Office

Madison Wisconsin Bankruptcy Attorney - Madison Lawyers Office

10 E. Doty St., Suite 800
Madison, WI 53703    map
Phone: 608.441.5199

Janesville Office

Janesville Bankruptcy Lawyers Office

20 E. Milwaukee, Suite 302
Janesville, WI 53545    map
Phone: 608.758.4080

 

state bar

Proud to Serve Wisconsin!

counties served

Firm clients live or work in Dane, Rock, Green, Sauk, Columbia, Richland, Iowa, Lafayette, Grant, Jefferson, Walworth, Dodge, Marquette, Adams or any adjacent county

Bankruptcy Stops Forclosure

Your Madison Wisconsin Bankruptcy Lawyer, Attorney Zaleski, can stop your forclosure.

What is Foreclosure?

Foreclosure refers to the legal process by which a lender forces the sale of a property in order to be repaid the money it has loaned the buyer of the property. Foreclosure is a complicated area of law that is regulated by state statute. If a mortgage contains a “power of sale clause,” the mortgage may be foreclosed without a lawsuit. This is sometimes known as a “non-judicial foreclosure.” This means quite simply that you could lose your house without ever going to court. If, on the other hand, the mortgage does not contain a power of sale clause, then the foreclosure occurs through the court process. This is sometimes referred to as a “judicial foreclosure.” Basically, the lender files a lawsuit against the buyer and through the court process, obtains judicial permission to sell the property. This is perhaps the more common foreclosure, at least in terms of what our clients face. As such, the comments here generally contemplate this type of foreclosure.

What Happens in Foreclosure?

1. The foreclosure lawsuit

To start the process, the lender files a lawsuit against the buyer in the circuit court where the property is located. The document which starts the lawsuit is called a “complaint,” which the lender “serves” or delivers upon the buyer. The buyer in turn has a certain time period in which to file a formal answer to the complaint. Quite often, buyers do not know what to do or do not understand what is going on, and therefore fail to file an answer. In such cases, the lender obtains what is called a “default judgment.” This default judgment allows the lender to proceed with its plan to sell the property. This is quite common. Of course, the buyer has the right to file an answer and to defend against the foreclosure, to essentially try and save the property. If the lender prevails in the foreclosure case, the court issues a “judgment of foreclosure.” Like the “default judgment,” this is a court order which authorizes the lender to sell the house.

2. The redemption period

Between the judgment of foreclosure and the sheriff’s sale, there is a time period that the law gives the buyer to basically become current or otherwise work out a financial arrangement with the lender. In Wisconsin, the redemption period is generally 12 months. However, if the lender agrees to “waive the right to deficiency,” the redemption period drops to 6 months. The redemption period drops to 2 months if the property is abandoned.

3. The sheriff’s sale

Once a lender obtains a “default judgment” or “judgment of foreclosure,” it then has the legal authority to sell the property. Under the law, the county sheriff’s office then conducts an auction wherein the property is sold to the highest bidder.

4. The confirmation of sale

After the “sheriff’s sale” of the property, the court holds a hearing called a “confirmation of sale.” At this hearing, the court approves the sale and basically transfers legal ownership to the new buyer.

5. The eviction

Quite often, the original buyer will still be living in the property at the time the judgment is entered, at the time of sale, and at time the confirmation of sale hearing is held. As a result, the lender usually obtains an eviction order that authorizes the sheriff to remove the original buyer. Just like a tenant who fails to pay rent, a “buyer” or “owner” can similarly be evicted as a result of a foreclosure. At such point, the “buyer” or “owner” is actually no longer the legal owner of the property and can be forced to move out by the sheriff.

How Can Bankruptcy Stop Foreclosure?

The automatic stay

The filing of a Chapter 7 or Chapter 13 bankruptcy petition generally results in what is called an “automatic stay.” In basic terms, this is an automatic court order through the bankruptcy court that prevents a creditor, such as a lender, from taking any action against the person filing the bankruptcy. Quite simply, the filing of the bankruptcy stops the foreclosure proceeding. In order to proceed with foreclosure, the lender must then get special permission from the bankruptcy court to do so. Generally, the bankruptcy filing will stop the foreclosure process up until the confirmation of sale hearing. However, the earlier in the process a person takes action, the better. You do not want to wait until the last possible minute to try and save your house.

The Chapter 13 bankruptcy plan

Through a Chapter 13 bankruptcy plan, the buyer, who is presumably behind on the mortgage payments, proposes to pay the amount that he or she is behind, “the arrearages,” over a period of time. The bankruptcy law generally allows this period of time to be anywhere from 36 to 60 months depending on a number of factors. For example, if you have missed 6 months of mortgage payments and each payment is $1000.00, you are $6000.00 behind or in “arrears.” The lender’s position will generally be that it wants the $6000.00 or it will foreclose and sell your house. Understandably, you may not have that type of money to pay up front in a lump sum. A Chapter 13 bankruptcy allows you to pay this $6000.00 over 36 to 60 months in a repayment plan administered through the bankruptcy court. If your plan is accepted or “confirmed” by the court, you stop foreclosure, keep your home, and pay off the arrearages over time on a payment schedule that you can afford.

Attorneys Fees Paid Through Chapter 13 Plan

Quite often, clients facing foreclosure cannot afford to pay the entirety of their legal fee upfront. Fortunately, the legal fees can be structured so that the majority of the fees are paid through the Chapter 13 Plan over 36 to 60 months. While you most likely will have to pay part of the fee in advance, Attorney Zaleski will work with you to come up with an arrangement that fits your budget.

Attorney Zaleski has the knowledge and experience to help you avoid foreclosure and keep your family in your home. Contact us to schedule your free initial consultation at our Madison or Janesville offices.