Friday, February 25, 2022

Illinois Court Denies Borrower Appeal Concerning Foreclosure Sale

When can the automatic stay in a consumer bankruptcy case definitively stop a foreclosure sale from happening in Illinois? Can a foreclosure sale move forward if a debtor has filed for Chapter 13 bankruptcy, for example, and that debtor ultimately plans to include a mortgage in the repayment plan? And what steps might a debtor take in order to prevent a foreclosure sale after filing for bankruptcy? There are a number of ways in which foreclosures and consumer bankruptcy cases can be interrelated, and a recent ruling in the 1st District of the Appellate Court of Illinois provides some clarification. In BAC Home Loans Services, LP v. Short (2017), the court confirmed a judicial foreclosure sale after the debtor argued that a bankruptcy filing should have stopped the sale. Our Oak Park foreclosure defense attorneys can tell you more about the case and some of its potential implications.

Getting the Facts of the Case

Back in 2007, the debtor and his wife bought a house in Illinois, but they later defaulted on the mortgage. Following significant litigation, the court ultimately entered a judgment allowing for the foreclosure and sale of the property, noting that “if a redemption was not made, the property would be sold at a public sale.” While there were multiple stays of the foreclosure sale, the foreclosure sale ultimately occurred on February 8, 2019, and the U.S. Bank purchased the property. The debtor argued that the foreclosure sale should not have been able to occur because he filed a petition for Chapter 13 bankruptcy at 11:29 a.m. on February 8, 2019—the same date as the foreclosure sale—and the automatic stay should have stopped the foreclosure.

U.S. Bank, which purchased the property in the foreclosure sale, argued that the foreclosure sale did not occur in violation of the automatic stay because the foreclosure sale occurred at 10:41 a.m. on February 8, 2019, prior to but less than an hour before the debtor filed the bankruptcy petition. At the circuit court, both parties were permitted to provide evidence about the specific time that the foreclosure sale occurred. The court confirmed the foreclosure sale, and the debtor appealed. Ultimately, the appellate court confirmed the lower court’s ruling and concluded that the debtor had not submitted evidence to prove that evidence existed that the bankruptcy filing occurred prior to the foreclosure sale.

The court underscored that, had the debtor produced evidence that the foreclosure sale occurred after the bankruptcy filing, the sale would have been in violation of the automatic stay.

Contact Our Experienced Foreclosure Defense Lawyers in Oak Park

Do you have questions about keeping a foreclosure off your credit report or stopping a judicial foreclosure? You may have multiple options available to avoid foreclosure, including the possibility of a short sale, a deed in lieu of foreclosure, or even a Chapter 13 bankruptcy filing. Do not hesitate to get in touch with an Oak Park foreclosure defense lawyer at our firm to learn more about how we can assist you. Contact the Emerson Law Firm for more information.

See Related Blog Posts:

What are the Steps for a Deed in Lieu of Foreclosure?

Pros and Cons of a Deed in Lieu of Foreclosure