FAQ - Stopping Creditors

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Stopping Creditors

Can I get a repossessed car back?

Yes, if you file Chapter 13 before the creditor has sold the car. In Arizona, repossessed cars must be held for 10 days. After that time, the creditor may sell the car. [9-98]

For more information, see Car Repossession.

Can home foreclosure be stopped?

Yes, if you file Chapter 13 before the home is sold in a foreclosure sale.

When you file Bankruptcy, a stay is automatically put in place which prohibits the commencement or continuation of the foreclosure. [11 U.S.C. � 362] However, the sale is not stopped by the bankruptcy filing. It is only suspended. Arizona law [ARS � 33-810] postpones the foreclosure sale even if those who are conducting the sale are not aware of the bankruptcy.

If your Chapter 13 plan is approved by the court and you successfully complete the plan, the foreclosure will be permanently stopped. If your plan is not approved, or if you are unable to complete the plan, the stay will be terminated. The foreclosure sale can be completed without any notice to you if the stay is terminated.

Chapter 7 also causes the stay to be put in place, and it will temporarily suspend foreclosure sale. The foreclosure can be completed when the stay is lifted at the end of the bankruptcy, or sooner if the creditor requests. [2-12-99]

For more information, see Home Foreclosure.

I received a foreclosure notice giving me the date that they will hold a sale on my home. When do I have to move out? If I file Chapter 7 am I giving back the house? How much time do I have to file either Chapter 7 or 13?

You have asked several questions and I will attempt to address each of them:

When will you have to move out? The short answer is that if you are not out of the property in about two weeks after the foreclosure sale date, you can be physically removed. Let me explain...

A foreclosure notice under a Deed of Trust in Arizona will specify that date on which the property will be sold. If the sale is conducted on that date--the sale could be continued to a later date, but you do not have to be given notice--you will be living on someone else's property.

The new owner will be able to remove you from what is now his property through Arizona's Forcible Detainer statutes (ARS 12-1171 et seq). (These are the same statutes which allow a landlord to remove a renter who has not paid the rent.) The procedure to remove you from the property are:
The new owner of the property must give a written demand for you to leave the property. If you have not moved after 5 days, the owner may commence a forcible detainer action against you. [ARS 12-1173]
The court will issue a summons within a day of the forcible detainer complaint being filed against you. The summons must be delivered to you at least 2 days before the trial. [ARS 12-1175]

At the trial, the court can grant a judgment for the owner's costs, as well as rent due (if there was a rental agreement).

Five calendar days after the trial, the court will grant a "writ of restitution". [ARS 12-1178] The writ gives the owner the right to have the Sheriff physically remove you from the property.

If you add up the days required for each step, the new owner could physically remove you from the property twelve days after the foreclosure date, although in most cases it will take several days longer.

If you file Chapter 7, are you giving the property back? Yes. I would not choose those exact words, but a Chapter 7 generally does not enable you to stay in the property. The stays which go into effect when you file the Chapter 7 do temporarily suspend the foreclosure sale (if it has not been held), or the forcible detainer. But since it will not help you catch up on missed payments, the Bankruptcy court will, in most cases, remove the stays upon the mortgage company's request and allow the foreclosure or forcible detainer action to be completed.

How much time do you have to file? If you file Chapter 13 to keep your home, you must do so before the foreclosure sale date on your property. The automatic stays will then stop the sale. If your plan provides for the curing of back payments on your mortgage, and if you make the payments which become due after the case is filed, you should be able to keep the property.

Filing means the date that the petition commencing your bankruptcy is delivered to Bankruptcy Court. It is not the date that you hire your attorney, return his questionnaire or pay him. You must take care of these matters enough in advance of the sale date to give him the time he needs to get the case filed.

If you are filing Chapter 7 the filing date is much less important since it will not help you keep the home.

[11-8-99]

In 1999 a firm of collection attorneys got a judgment entered against me. Now they have gotten a bench warrant for my failure to answer a subpoena. Then, a few days ago, when I came home, there was a notice taped to my door from a sheriff who had been sent to deliver court papers, with the word LEVY circled on the bottom. What happens with the warrant, levy & judgment?

The bench warrant. A bench warrant is commonly issued only after:
1. The creditor has obtained a judgment against you.
2. The creditor has served a subpoena on you requiring that you appear and testify (the creditor wants to ask you where you work so they can garnish your wages, where you bank so they can garnish your bank account, and what other property you own so they can execute on it.)
3. You have not appeared to testify as required by the subpoena.
Once a bench warrant has been issued, you are very likely to be taken into custody should you be pulled over for a traffic violation. The filing of a bankruptcy does not automatically cancel the bench warrant. You should be sure to advise your attorney of the bench warrant so that they can advise the court and the attorneys that have gotten the judgment of the bankruptcy so that the court that issued the bench warrant and see that it is quashed (a lawyer word meaning cancel).
Levy and execution. A levy is a legal method that a creditor may use to seize (take) property that you own. Most commonly a levy refers to an action by IRS or the state tax agency (Arizona Department of Revenue here) to take something from you. Seizure of property to satisfy a judgment would ordinarily be referred to as "execution," since the sheriff is executes the judgment by taking the property from you for it to be liquidated to pay the creditor. Filing of a bankruptcy places a stay into effect which prohibits further execution under the judgment.
The judgment lien. A judgment is the formal decision of a court. I can't tell you what the meaning of a judgment is without seeing it, but it is reasonable to assume that the court has decided that you owe a creditor some money. When the judgment is recorded, it can become a lien on real property which you own. If you have real property (such as a house) which is exempt as your homestead ($100,000 [$150,000 after 8-04] is equity in your home is exempt under Arizona law), you would want to file a Complaint to Avoid a Judgment Lien. If you do not have any property to which the lien may attach, the filing of the complaint would not have any effect. [8-26-99]

These questions and answers are not intended as legal advice or as a statement of the law. They are intended to suggest areas which you should discuss with your attorney.

Although Bankruptcy law is Federal code applicable to all states, the way it is applied may depend upon state law and varying practices of the courts, trustees, and even attorneys. As a result, some of these answers are directly applicable only in cases filed by our office in Arizona.

This page was last revised: 10/11/16