Stopping a Mortgage Foreclosure Using Chapter 13

There are only two ways to stop a mortgage foreclosure in Tennessee. Your mortgage lender can voluntarily stop the foreclosure proceeding, or you can file a Chapter 13 bankruptcy.

Generally, you will discover that mortgage companies are reluctant to voluntarily stop foreclosure proceedings. Under Tennessee law, a mortgage company can start foreclosure proceedings once you are placed into default status because of missed payments. Usually, they will wait until you are two or three months behind before they put you into default status and accelerate the mortgage. Acceleration means that the mortgage company has declared the entire payoff balance due and payable.

Because mortgage companies are subject to federal and state banking regulations, changing the status of your account from “delinquent and accelerated” back to “current” is complicated and time consuming. Further, a “delinquent and accelerated” mortgage account can be referred to a foreclosure law firm that has its own case management process. Once the foreclosure process starts, our experience has been that most mortgage companies are not set up to arrange side deals with consumers who promise to cure delinquencies on a case by case basis.

Tennessee is a “non-judicial foreclosure” State, which means that your mortgage company and its foreclosure lawyer do not have to go before a state court judge to obtain permission to take title to your house through a foreclosure. Instead, they need only advertise a notice of the pending foreclosure sale of your property for four consecutive weeks in the official legal newspaper of the county where you live. This foreclosure notice serves to give you official notice of your right to redeem the property by paying the entire balance due. This notice also advises you that your property will be sold on the courthouse steps on the first Tuesday of the forthcoming month.

Once your account has been referred to a foreclosure law firm, therefore, Chapter 13 bankruptcy remains your most realistic option for saving your home. Chapter 13 will stop any pending foreclosure up until literally the minute before your property is sold on the courthouse steps. It does not matter that the auctioneer may not have actual notice of your Chapter 13 filing. Unless the bankruptcy court has ruled to limit the applicability of the bankruptcy stay in your case, your Chapter 13 filing will invalidate any foreclosure sale.

Contacting Clark & Washington as soon as you learn of a pending foreclosure remains your best course of action. Although we can handle emergency filings, we can serve you better if we have time to carefully review your intake questionnaire, meet with you and discuss your various options. However, if, for whatever reason, you you have an emergency and a pending foreclosure within the next few days, our firm is uniquely qualified to represent you in this emergency situation.

Remember: if you have ANY questions, please do not hesitate to call us for a free telephone consultation at (615) 831-7003.