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Bankruptcy and After Foreclosure

      When a debtor files a Massachusetts Chapter 7 bankruptcy there is an automatic stay that stops most collection actions, including foreclosure and eviction proceedings. Notwithstanding, the bankruptcy will protect the debtor for only a short time. Holders of mortgages that are delinquent may file motions for relief from the stay for the purpose of foreclosing, and for permission to evict the owner after foreclosure. If such a motion is allowed, Massachusetts state law is followed to complete the foreclosure sale. This can take months. After the foreclosure auction, the holder of the mortgage may have ownership, but it must acquire possession via a summary process action, otherwise known as an eviction. This can lead to further delays in the lender recovering possession. To save time, the lender will often negotiate with the former property owner. A former Chapter 7 debtor-client who experienced foreclosure was recently offered $4,000 to move out and allow the bank to have immediate possession.

Massachusetts Foreclosure Help

I’m often asked if there are any state or federal resources to assist people in foreclosure. While the federal government has been very slow to react to the foreclosure crises, Massachusetts does offer some help.

On November 29, 2007, Governor Patrick signed a bill called An Act Protecting and Preserving Home Ownership into law.  Provisions of this landmark legislation include a 90-Day Right To Cure After Default on Mortgage Loans. The Act establishes a 90-day statutory Right To Cure a default on a 1-4 family, owner-occupied residential property and mandates the information to be included on this 90-day Notice of Right to Cure. This will help with some Massachusetts foreclosures. Before this law passed the time period required was thirty days.

The Act has many other provisions to help with a MA foreclosure. For information about the law visit www.mass.gov/foreclosure.