Can I File an Emergency Bankruptcy Petition to Stop a Foreclosure Sale?

If you receive a foreclosure notice from your mortgage lender, you might wonder whether filing for bankruptcy will stop the sale. The answer is "Yes" if you move quickly. Filing an emergency bankruptcy petition will buy time and, depending on the bankruptcy chapter you file, might even help you avoid foreclosure.

What Is an Emergency Bankruptcy Petition?

Many people want to stop a foreclosure on the eve of bankruptcy. An emergency petition can do just that by reducing the time it typically takes to prepare and file a bankruptcy case. An emergency bankruptcy petition lets you file for bankruptcy by completing a few forms and taking a credit counseling course. You then have 14 days to complete the rest of the required paperwork and file it with the court.

How an Emergency Petition Delays Foreclosure

It doesn’t matter whether you use a regular or emergency petition. The instant you file for bankruptcy relief, an automatic stay goes into effect, prohibiting your lender from going forward with the foreclosure sale.

But you must file before the foreclosure sale takes place. Bankruptcy can delay or stop foreclosure if the lender hasn’t sold the home. Bankruptcy won’t help after the sale because, at that point, you no longer own it.

Can an Emergency Bankruptcy Petition Save a Home?

Filing an emergency bankruptcy petition will delay foreclosure in Chapters 7 and 13. However, you’ll want to file for Chapter 13 if your goal is staying in the house.

Chapter 7 will stop a foreclosure, but it will be temporary. Because it doesn’t provide a mechanism to help you catch up on mortgage arrears, the most you’ll accomplish by filing for Chapter 7 will be remaining in the home without paying the mortgage for a few months.

Why? As long as you remain behind on mortgage payments, the lender can use its lien rights to foreclose and recover the house.

The lender can but doesn’t have to wait until the end of the Chapter 7 case to proceed with foreclosure. Instead, it can file a motion asking the court to lift the automatic stay and receive permission to proceed within a month or two of the bankruptcy filing.

If you'd like to keep your home, the better option is filing for Chapter 13. The Chapter 13 plan allows you to continue making your monthly payment while catching up on arrearages over three to five years. As long as you demonstrate the financial ability to comply with Chapter 13 payment requirements, the lender must let you stay in the house.

Find out everything you must do to protect a home in bankruptcy.

Determining the Foreclosure Sale Date

Before filing for bankruptcy, you’ll want to read the foreclosure notice carefully to determine the date of your foreclosure or trustee sale. When you contact bankruptcy attorneys to help you file, they’ll want to know the foreclosure date to understand how quickly they’ll need to move.

If you can’t find the foreclosure date, call the lender or check online. Many list the dates and times of foreclosures.

It’s best to assume you have little time to stop the sale. Usually, state law requires your lender to give you ample notice of your default and wait a certain statutory period before setting a foreclosure sale date. But that doesn’t mean much if you don’t know where you are in the process. Also, in some states, the sale can occur four weeks after the foreclosure begins.

Also, federal and state foreclosure laws change periodically—sometimes quite quickly in response to economic situations like pandemics. So, in every case, assume time is of the essence and immediately ascertain when the sale will occur.

Learn more about bankruptcy and foreclosure.

Steps For Filing an Emergency Bankruptcy Petition

In most cases, you can file an emergency bankruptcy petition by completing the following forms:

• Form 101 - Voluntary Petition for Individuals Filing for Bankruptcy
• Form 121 - Your Statement About Your Social Security Numbers
• the names and addresses of all of your creditors (the creditor mailing list or mailing matrix—check with your court for formatting requirements)
• a credit counseling certificate requirement or a waiver request, and
• a filing fee, a request for a fee waiver, or a request to pay the fee in installments.

After filing the emergency petition, you have 14 days to file the rest of the required bankruptcy forms and schedules. Failure to do so will typically result in the dismissal of your case without prejudice, allowing you to file again immediately.

The official bankruptcy forms are on the U.S. Courts bankruptcy form webpage. Some courts might require additional forms. Your local bankruptcy bankruptcy lawyer will know the requirements in your district.

Learn more about filing an emergency bankruptcy petition.