This presentation talks about bankruptcy and foreclosure in Ohio.

1. SCOTT R. NEEDLEMAN
BANKRUPTCY AND FORECLOSURE DEFENSE ATTORNEY
CAN BANKRUPTCY
STOP A FORECLOSURE?
A Look At How Does Filing Bankruptcy
In Ohio Halt The Foreclosure Process

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For most people, owning a home remains the American dream. Once you
have realized that dream, if a financial crisis threatens the future of the
dream it can be emotionally devastating. The recent national financial crisis
has led to a record number of foreclosures across the country as well as a
significant increase in the number of bankruptcy petitions filed in recent
years. If you have been notified by your lender that foreclosure
proceedings are forthcoming, filing for protection under the U.S.
Bankruptcy Code may be a solution; however, it is not an automatic fix for
all homeowners facing foreclosure.
UNDERSTANDING THE FORECLOSURE PROCESS IN
OHIO
Most borrowers depend on financing to purchase a home. When you take
out a mortgage loan to finance the purchase of your home you agree to
pay that loan back in monthly payments. You also secure the debt with
your home, meaning that the lender has a legal right to foreclose on your
property should you default on the loan. Contrary to what many people
believe, a borrower defaults on a loan when he or she is a day late on a
payment. Most lenders, however, do not even consider foreclosure
proceedings until a borrower is two to four months behind on the
payments.
In Ohio, a lender usually files a foreclosure Complaint after a borrower has
missed three or more payments. A borrower then has 28 days to file an
Answer to the Complaint. Failing to file an Answer can lead to a rapid
Summary Judgment against the borrower and subsequent sheriff’s sale of
the property. If an Answer is filed the borrower may be granted additional
time to try and work out a resolution with the lender. Eventually, if no
resolution is forthcoming the court will grant the foreclosure and the lender
will schedule the property for Sheriff’s sale. After the sale there is a
redemption period during which the borrower has the right to redeem, or

3. Can Bankruptcy Stop a Foreclosure?  thecolumbusbankruptcylawyer.com 3
buy back the property. Once the redemption period has expired the
borrower must vacate the property.
HOW DOES FILING BANKRUPTCY HALT THE
FORECLOSURE PROCESS?
When you file a bankruptcy petition the court orders an automatic stay as
soon as the petition is filed. An automatic stay is an order from the court
which is sent to all creditors ordering them to cease and desists all efforts
to collect on the debt owed to them. As long as your lender is listed on the
schedule of creditors the notice of automatic stay will be served on the
lender. At that point, the foreclosure process must stop. There are a limited
number of exceptions to the automatic stay. For example, you cannot
repeatedly file and dismiss bankruptcy in an attempt to drag out the
foreclosure process indefinitely; however, in most cases the automatic stay
halts the foreclosure proceedings for 30 days. At the end of the 30 day
time period the lender may request the bankruptcy court lift the automatic
stay so that the foreclosure proceedings may resume.
CHAPTER 7 BANKRUPTCY EXEMPTIONS
As mentioned previously, the initial filing of a bankruptcy petition halts the
foreclosure process but it may resume in 30 days if nothing else is done to
resolve the default. In a chapter 7 bankruptcy, also known as a liquidation
bankruptcy, a debtor’s non-exempt assets may be sold to pay debts owed
by the debtor. Ohio, however, has a very liberal homestead exemption
which allows a debtor to exempt up to $132,900 in real property. This
exemption though does not protect the home from sale through a
foreclosure proceeding. The exemption only protects the home from sale
through the trustee as part of the bankruptcy. Filing bankruptcy, however,
can free up money by discharging other debts which may allow the debtor
to catch up with the mortgage. At the end of a chapter 7 bankruptcy, with

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few exceptions for debts that cannot be discharged, all debts are
discharged, meaning the debtor no longer owes the debt.
A BRIEF OVERVIEW OF CHAPTER 13 BANKRUPTCY
In a chapter 13 bankruptcy, commonly known as a “wage-earners”
bankruptcy, the debtor is required to develop a plan to repay the majority
of his or her debts over an extended period of time -- usually three to five
years. In a chapter 13 bankruptcy, even non-exempt assets can typically
be protected as long as the debtor successfully completes the repayment
plan. Debts remaining after the successful conclusion of the repayment
period are discharged.
RESOLVING THE DEBT
Whether a debtor files a chapter 7 or chapter 13 bankruptcy, the
underlying debt to the lender must be resolved to avoid foreclosure. The
automatic stay can be looked at as an immediate “stop gap” measure to
buy a debtor time; however, it is not a permanent solution to foreclosure.
If you foresee a change in circumstances in the very immediate future, a
chapter 7 bankruptcy may provide you with enough time to catch up your
payments as well as may free up income by discharging other debts. Many
debtors who wish to save a home that is in foreclosure, however, turn to
chapter 13. In a chapter 13, your attorney, along with the court, may be
able to assist you to work out a loan modification or reduced payments as
part of the repayment plan. Often, filing bankruptcy prompts a lender to try
and work out a solution that does not result in foreclosure.
SECOND MORTGAGES AND DEFICIENCY JUDGMENTS
If you have a second mortgage on your home, and your home is now
worth less than the amount owed on the first mortgage, your second
mortgage may now be considered an unsecured debt and may be subject
to discharge through a chapter 13 bankruptcy. Becomes home values

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plummeted in recent years, this is not an uncommon scenario. The reduced
value of your home though could be beneficial in bankruptcy if you are
able to discharge a second mortgage.
Another way that bankruptcy may be able to help is if you owe a deficiency
judgment after your home is foreclosed on and sold. Borrowers frequently
are unaware that this is possible. Imagine, for example, that you owe
$150,000 on your mortgage and the lender forecloses on the loan. The
home is subsequently sold through a sheriff’s sale for $120,000. You may
legally be responsible for the remaining $30,000 owed to the lender. This
deficiency amount can be discharged through bankruptcy.
Each foreclosure scenario presents a unique set of facts and circumstances.
Be sure to consult with an experienced Ohio bankruptcy attorney
immediately if you receive a notice of foreclosure or if you are concerned
that you are headed toward foreclosure because you are behind on your
mortgage payments.
Save the Dream Ohio, Understanding the Foreclosure Process
Ohio Attorney General, Foreclosure Frequently Asked Questions
Pine Tree Legal Assistance, Bankruptcy: Is It the Right Choice for You
CNN Money, Bankruptcy Can Save Your House from Foreclosure

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About the Author
Scott R. Needleman
Every associate at The Needleman Law Office is committed to handling
your case in both a personal fashion and in a professional manner. In other
words, we treat you the way we would want to be treated. We will take a
personal interest in your situation, making sure you understand exactly
what is happening and what options you may have. Then we’ll fight to
ensure the best possible outcome for your situation.
The Needleman Law Office
5300 E. Main, Suite 109
Columbus, OH 43213
614-575-1188
http://thecolumbusbankruptcylawyer.com/