Expert: Norma Duenas - California Bankruptcy Attorney - 7/16/2010

Question
I will be filing a Ch. 13.  And I will be surrendering the house... what happens in a Ch. 13 case??.... does the house end up going to foreclosure within the BK, or are the keys just handed back to the lender... And if I have it listed for short sale during the BK, what happens then... Thanks in advance for your answer.

Answer
If you are surrendering the house in your bankruptcy then the mortgage company will generally file a motion to lift stay so that they can proceed with foreclosing on the house. This motion is filed so that they can proceed with foreclosing on the home. Generally it takes approximately 2 months from the time your case if filed for the motion to be granted but it can take longer. After the motion to lift the stay has been granted in your bankruptcy case then the mortgage company will go through the process of foreclosing on the house. How long it will take will depend on what the procedure is in your state to foreclose on the home. For example in California they are required to give you a Notice of Default, then they must wait 3 months to give you a Notice of Sale Date, and so on. Depending on where the process was when you filed bankruptcy case, they will pick up where they left of after they get the motion to lift the stay granted. Sometimes the mortgage company will offer you cash for keys to move out by a certain time after the foreclosure.

If you have the home listed for short sale and you are in a bankruptcy case then you will have to get court permission to complete the sale of the house (if the home is still in the bankruptcy). You will have to have the bankruptcy estate abandon the asset in order for you to complete the sale, unless the motion to lift the stay has already been granted.

http://hubpages.com/hub/Chapter-13-Bankruptcy-Information