Timely Bankruptcy Can Stay Foreclosure In District Of Columbia

Foreclosure auction terminates right to cure in District of Columbia

In re JOANNE A. BOBO, Debtor.

Case Law
Case No. 99-02615 (Chapter 13)
UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF COLUMBIA
246 B.R. 453; 2000 Bankr. LEXIS 340; 35 Bankr. Ct. Dec. 249

March 28, 2000, Decided

Facts: Creditor was the successful bidder at the foreclosure auction of debtor's residence. After auction, but before creditor had recorded a deed effectuating the sale, debtor filed Chapter 13. Creditor filed a motion for relief from the automatic stay. Debtor asserted a right to cure under 11 U.S.C.S. § 1322(c)(1).

Issue: Whether debtor can cure the debt

Ruling: No. Section 1322(c)(1) granted debtor the right to cure the default until the residence was sold at a foreclosure sale conducted in accordance with applicable nonbankruptcy law. The right to cure terminated upon the auctioneer's declaring the highest bidder at an auction sale. Any additional steps of obtaining court approval, awaiting the expiration of any cure period under nonbankruptcy law, paying the purchase price, and recording the deed, did not alter the fact that the purchaser's right to acquire the property intervened The property was sold at a foreclosure sale to debtor's detriment.

Lesson Learned:: Certain courts have determined that the language of 11 U.S.C.S. § 1322(c)(1) is unambiguous and clearly provides that the date of the foreclosure auction is the date that the right to cure terminates. There is no lack of clarity in 11 U.S.C.S. § 1322(c)(1) as drafted; cure rights terminate on the actual date of the auction sale.

Written by Kevin Levonas and Jerry L.