Avoid Foreclosure with timely Bankruptcy in Michigan

A timely Bankruptcy can prevent foreclosure in Michigan

In re: CHARLES JOYCE CAIN and CHRIS ALAN CAIN, Debtors. CHARLES JOYCE
CAIN and CHRIS ALAN CAIN, Plaintiffs-Appellants, v. WELLS FARGO BANK, N.A.,
Defendant-Appellee.

Case Law
No. 04-1372
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
05a0394p.06; 423 F.3d 617; 2005 U.S. App. LEXIS 19897; 2005 FED App. 0394P
(6th Cir.); Bankr. L. Rep. (CCH) P80,357; 54 Collier Bankr. Cas. 2d (MB) 1438

March 14, 2005, Argued
September 16, 2005, Decided

Facts: On October 1, 2003 -- twelve days after the foreclosure sale -- the A filed for protection under Chapter 13 of the Bankruptcy Code. At the same time A filed a Chapter 13 plan under which the mortgagee Bank would retain its mortgage and the A would repay the indebtedness over the life of the plan. The Bank objected to confirmation of the plan, pointing out that it had already acquired the property at the mortgage foreclosure sale subject only to the A's right of redemption. According to mortagee bank, the redemption period was not extended or stayed by the A's bankruptcy filing.

Issue: Whether debtor can submit repayment plan even after foreclosure.

Ruling: No. The court affirmed the district court's order. Regardless of whether a right of redemption survives the sale under state law, 11 U.S.C.S. § 1322(c)(1) unambiguously designates the foreclosure sale itself as the event that terminates a Chapter 13 debtor's right to cure a home mortgage default by filing a plan that calls for repayment outside the redemption period. Under the current language of the Bankruptcy Code, a Chapter 13 plan may provide for the curing of a default with respect to a lien on the debtor's principal residence until such residence is sold at a foreclosure sale that is conducted in accordance with applicable non-bankruptcy law. 11 U.S.C.S. § 1322(c)(1).The court was not persuaded that the phrase "conducted in accordance with applicable non-bankruptcy law" expanded the meaning of "foreclosure sale" to encompass a state-law redemption period. The language did no more than require that the sale adhere to procedures mandated by state law.

Lesson Learned: If debtor availing of Chapter 13 intends to cure her delinquency, he shall do so within the time frame of his redemption period.

Written by Kevin Levonas and Jerry L.