Mitchell Allen is the founder and CEO of the Debt Education Certification Foundation, an organization that provides credit counseling certificates and debtor education courses for those who are filing for bankruptcy. He’s also the founder of legal services marketing agency LeadRival. He’s the author of numerous books on debt and bankruptcy.
Mitchell is not an attorney and his answers should not be considered legal advice. Please consult with an attorney about your legal situation. Full Bio
How long can I live in my home during the foreclosure process?
Different states have different laws that govern how foreclosures are finalized. The primary division is between judicial and non-judicial states. There are 22 judicial states that require foreclosures to proceed through the court system. Non-judicial states allow for the mortgage company lien holder to implement the process outside of an official foreclosure filing in court. Mortgage companies in non-judicial states can deliver notice to the mortgagor and begin the resale process much quicker. So, the amount of time you can live in the home after foreclosure can vary greatly, depending on the material case facts and the state in which you live.
Statutory Redemption States
Some states have specific laws that apply to foreclosure that involve statutory redemption. Statutory redemption laws are designed to keep a foreclosed property from selling at auction for a low sale price. The law allows the mortgagor to reclaim/redeem the property for the sale price if the sale price is less than the actual value of the mortgage. Mortgagors in statutory redemption states have the right to pay all delinquent payments and retain the home at any time during the foreclosure process.
In equitable redemption states, the mortgagor can also match the sale price from an auction, possibly being able to stay in the home while the matched sale is approved. In some states, this can take up to a year. In some cases, this can occur after the foreclosure sale is complete. Once again, this is dependent on state law and outstanding balance. However, it does require that the full price be paid to the mortgagee, but the process can include a new mortgage lender who essentially refinances the home.
Homeowners who file Chapter 13 bankruptcy may also have additional legal protection if the home is financially affordable within the bankruptcy restructuring plan. This opportunity is largely up to a bankruptcy trustee, but the purpose of Chapter 13 bankruptcy is usually to protect the filer's home, as well as other property. It is also filed according to income qualifications and ability to pay within the five-year restructuring plan, but this can be an effective method of staying in your home during foreclosure when the situation merits its use. A Chapter 7 bankruptcy petitioner is usually attempting to discharge all debt, so the ability to keep or live in the home for an extended period is largely determined by the length of time that a mortgage has been maintained in good payment standing.
It is evident that it is unclear how long any homeowner will be able to stay in their home following a foreclosure. Depending on the state and additional state laws regarding bankruptcy protections, the process could take a significant amount of time to finalize. This potential situation is why it is important to discuss any foreclosure proceeding with a real estate or financial attorney who can evaluate the case and provide sound legal advice on how to respond to any foreclosure. There are legal responses that can keep you in the home for an extended period of time, including the number of cases currently on the court docket. However, many homeowners under foreclosure find it easier to leave the mortgage behind and make arrangements for future housing.