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Multiple Chapter 7, 13 filings ultimately prevent foreclosure

Sometimes, persistence in bankruptcy court pays off for Maryland filers. In one case, a family was able to preserve the title to their $800,000 home after making five trips to a federal bankruptcy court. A couple in the case was able to claim that they were the victims of overzealous and needless prosecution by lenders who are looking to foreclose on the home unfairly. That process began in 2007 according to official reports.

News articles indicate that the couple was first subject to a foreclosure judgment in 2007, at which time the mortgage was valued at $681,000. The man in the couple had planned to file for Chapter 7 federal bankruptcy in February 2008, just weeks before the home was slated to be sold at an auction. That bankruptcy filing canceled the sale of the home. Subsequently, the bank sought a review of the automatic stay that prevented the home from being seized because of the bankruptcy filing. In a series of additional court filings, the homeowners continued to make additional bankruptcy claims, including modifications for Chapter 13 payment plans to supersede the Chapter 7 petition. Many of those additional legal maneuvers took place just hours before several home sales were slated to occur. The man's wife also contributed to this effort, as she filed bankruptcy petitions to prevent additional attempts to auction their home.

After delaying the bank for years, the couple appears to have finally regained the title to their home, explaining that one of the banks that had received their mortgage upon transfer had violated statutes of limitations regarding the initial 2007 foreclosure. A judge in the case agreed, deciding that bankruptcy filings necessarily preempt actions in the state court, and the bank did not properly file claims to the property within the timeline established in the initial 2007 foreclosure agreement.

Ultimately, this case shows that homeowners may be able to file multiple bankruptcies in order to delay the execution of foreclosure proceedings upon their property. Further, it underscores the need for banks to maintain proper records and follow legal precedents when seeking property foreclosure. Chapter 7 bankruptcy filers who are afraid of losing their homes may benefit from the outcome of this case. Qualified bankruptcy attorneys can help those individuals learn more about their rights to their property and real estate holdings.

Source: Business Record, "Six years and five bankruptcy filings later, Johnston couple can keep home, court rules" Kent Darr, Dec. 18, 2013

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