How Long Can I Wait To File Bankruptcy And Still Save My Home From Foreclosure

Bankruptcy courts defer jurisdiction over real estate redemption to state law. In Illinois, the Mortgage Foreclosure Act found at 735 ILCS 5/ et seq recognizes a statutory right of redemption until the expiration of the later of 3 months after the date of judgment of foreclosure; or 7 months from the date of service of process.

Illinois also permits an equitable right of redemption to exist up until the point the property is sold at judicial or sheriff sale. These redemption periods are incorporated into Federal law according to the Seventh Circuit Court of Appeals case of In re Colon.

In a quirk of procedure, Illinois requires the sale to be approved before transferring title to the property, however, the right to redeem the property expires at the moment of sale. This disconnect permits one last bite of the apple to the defendant who successfully defeats approval of the sale. The foreclosure law requires a Judge to confirm the sale in the absence of any of the following conditions: 1. The Notice of Sale is defective; 2. The sale is unconscionable; 3. The sale involved fraud; or 4. Justice would not be served.

In an unpublished decision involving one of my cases, the Third Judicial Circuit Court in Madison County Illinois denied confirmation of a sale after my client, the defendant, pointed out deficiencies in the Notice of Sale. By vacating the sale, defendant was restored to an equitable right to redeem the property.

Should defendant choose to file a chapter 13 bankruptcy case, she will be permitted the opportunity to cure the delinquent payments and keep her property.

Attorneys should examine the state court case file to determine whether grounds exist to extend the redemption time frame.