Debtor not entitled to stay foreclosure in Georgia

Chapter 13 does not save homeowner from losing their home in Georgia

IN THE MATTER OF: JOE HAYNES, JUDY CLARE HAYNES, DEBTORS.
CASE NUMBER 07-10365-WHD

Case Law
UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF GEORGIA, NEWNAN DIVISION
2007 Bankr. LEXIS 1830

April 18, 2007, Decided

Facts: The movant was the holder of a first mortgage deed to secure a debt on real property owned by the debtors. Pursuant to the power of sale contained within the deed to secure the debt, the movant foreclosed on the property in February 2007 and was the highest bidder on the property at the foreclosure sale. The day after the foreclosure sale, the debtors petitioned for relief under Chapter 13. The movant sought relief from the automatic stay so it could proceed in state court with the dispossessory action.

Issue: Whether debtor is entitled to a relief

Ruling: No. The court held that the movant was entitled to proceed with a dispossessory action because the movant could demonstrate that the foreclosure sale was final prior to the filing of the debtors' bankruptcy petition. The executed deed provided sufficient evidence that, under Georgia law, the debtors' equity of redemption had terminated before the bankruptcy petition was filed. The debtors' bankruptcy estate had not obtained an interest in the property.

Lesson Learned: 11 U.S.C.S. § 362(a)(1) of the United States Bankruptcy Code provides that the filing of a bankruptcy petition operates as a stay as to the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title. 11 U.S.C.S. § 362(a)(1). Under certain circumstances, a court may grant relief from the stay by terminating, annulling, modifying, or conditioning the stay.

Written by Kevin Levonas and Jerry L.