THIS INFORMATION IS INTENDED TO HELP FAMILIARIZE YOU WITH THE FORECLOSURE PROCESS. IT CANNOT REPLACE COMPETENT INDIVIDUALIZED LEGAL ADVICE.
WHAT IS FORECLOSURE?
When you borrow money to buy a house or land, the mortgage is secured by a Deed of Trust, which is a deed of the property from you to a Trustee, who usually is a lawyer. If you don’t make your mortgage payments as required, the Trustee has the power to sell your property. Foreclosure is the procedure the trustee must use to conduct the sale.
HOW DOES THE FORECLOSURE PROCESS WORK?
In Virginia your mortgage is secured by a Deed of Trust. If you are behind several months in your mortgage payments, your mortgage lender will inform the Trustee under the Deed of Trust and the Trustee will conduct a foreclosure sale. Usually, the courts are not involved.
You will receive at least one letter from the Trustee, and you will receive a copy of the foreclosure notice that will be advertised in a local newspaper. It will tell you who the Trustee is, where the foreclosure sale will be held, and when it will take place. The foreclosure sale is a public auction, usually conducted on the courthouse steps of the city or county where your property is located.
WHEN DO I HAVE TO MOVE IF MY HOUSE IS SOLD IN A FORECLOSURE SALE?
You do not have to move until the new owner gives you notice to move in writing. YOU DO NOT HAVE TO MOVE OUT BEFORE THE SALE DATE.
Even then, you have the right to stay in the house until the new owner files an Unlawful Detainer (eviction) in court and the judge says you must move.
If the judge rules in the favor of the new owner, the judge must give you at least 10 more days in which to move.
If you have not moved by the end of the 10 days, the landlord, based on the court order, can get a Writ of Possession. This allows the sheriff to remove you and your belongings from the home.
THE NEW OWNER MAY NOT CUT OFF THE UTILITIES, LOCK YOU OUT, OR REMOVE YOU OR YOUR BELONGINGS FROM THE HOME WITHOUT FIRST GOING TO COURT.
DOES BANKRUPTCY STOP A FORECLOSURE SALE?
Bankruptcy means you ask the court to excuse you from your duty to repay your creditors. A person or business you owe money to is called a creditor.Bankruptcy allows you to discharge (get rid of) most of your debts, but also keep a certain amount of property. Two kinds of bankruptcy apply to individuals and married couples not in business. These are a Chapter 7 bankruptcy and a Chapter 13 bankruptcy.
Once you file for bankruptcy, most debt collection must stop. This is called the “automatic stay.” Filing for bankruptcy stops foreclosures, repossessions, utility cutoffs, debt collection lawsuits, garnishments, levies, attachments, evictions where a judgment of possession has not been entered, and most other actions to collect debts.
IN CHAPTER 7 BANKRUPTCY, WHAT HAPPENS TO MY HOUSE?
In Chapter 7, which usually serves to discharge most of your debts, you can usually keep your house if you are current on your payments. However, if you are behind in your payments, you may have to file a Chapter 13 to keep property you’re buying on credit.
IN A CHAPTER 13 BANKRUPTCY, WHAT HAPPENS TO MY HOUSE?
In a Chapter 13 bankruptcy, you may be able to keep a house you’re buying even if you’re behind on payments. To keep the house where you live, you must make current payments, and you get three to five years to catch up missed payments.