Avoiding Foreclosure NY: Non-Bankruptcy Options to Stop the Sale

Can I Stay a Foreclosure Sale Without Declaring Bankruptcy?

If you live in New York, and your lender is trying to sell your house out from under you, you have options other than bankruptcy to have the courts stay (stop) the sales process.

What is an Order to Show Cause?

Besides declaring bankruptcy, an Emergency Order to Show Cause (OSC) is the other main method of staying a foreclosure sale. This method involves non-bankruptcy state law but is discretionary, meaning unlike the automatic stay in a bankruptcy case, a stay under an OSC needs to be court ordered.

Unlike a Motion on Notice (which is asking the court to do something – which can sometimes take a while depending on how busy they are), an emergency OSC can take less than a week. This is vital if the date of your foreclosure sale is rapidly approaching.

In order for an OSC to be accepted by the courts, you and your foreclosure attorney will have to “show cause” meaning you will have to convince the court WHY your foreclosure should not go through.

What is a Temporary Restraining Order?

The goal of an emergency OSC to have the courts issue a Temporary Restraining Order (TRO) against any entity involved in the sale of your property (this includes your lender and any court-appointed referees involved).

Your foreclosure lawyer will need to convince the judge that something went wrong with the foreclosure process and should be reviewed. If the court agrees, you may get the TRO in order to give you and your attorney more time to prove your case. This will automatically stop the foreclosure sale until the questions and concerns are cleared up.

How Does the Process Work?

You and your foreclosure attorney need to discuss if you have a legitimate reason to request an Order to Show Cause. Some examples include:

• defective process of service – your lenders didn’t follow the correct foreclosure process
• lack of standing – lenders can’t prove they own your debt
• predatory lending – your lender imposed unfair, deceptive, or abusive loan terms
• defective assignments – something’s gone wrong with the lender’s paperwork
• Or simply, you now have the money to start repaying the loan.

Once your lawyer completes the OSC paperwork, a copy needs to be sent to your lender’s counsel who must have at least 24 hours’ notice. Proof that this was done needs to be part of the OSC application that your foreclosure attorney submits to the court.

Once your OSC is submitted, the Court may choose to do any of the following:

• Sign the OSC with a TRO – This means that your foreclosure sale will be stayed (stopped) until the courts review your assertions and schedules a new court date.
• Sign the OSC without a TRO – Even if the TRO is denied, the OSC has an underlying application for similar relief that may still be granted on a non-emergency basis after the court has an opportunity to review the opposition of the lender.
• Decline to sign the OSC
  • If you don’t get an OSC stay, you could file a bankruptcy petition for chapter 7, 11 or 13,  depending on circumstances in order to get a mandatory stay.
  •  You may also elect to appeal and file an OSC at the Court of Appeals level.

To learn more about Orders to Show Cause, click here – https://www.nybankruptcy.com/services/foreclosure-solutions/orders-to-show-cause/

Nassau County Supreme Court Information –http://ww2.nycourts.gov/COURTS/10JD/nassau/foreclosure.shtml

Suffolk County Supreme Court Information – http://ww2.nycourts.gov/COURTS/10jd/suffolk/supreme.shtml

What to Do Next

If you home is in imminent danger of being sold at a foreclosure auction, reach out to New York foreclosure lawyer Ronald Weiss . He can work with you to determine if an Order to Show Cause could work for you and can help you get your case started. Call 631-823-7182 and take the first step to a fresh start.