URGENT: How to Stop a Pending Sale

Disclaimer: This is purely for educational purpose. Nothing on this site can be construed as giving legal advice. You are using this information at your own risk. You are to seek legal counsel in these matters.

Help, My House is Going Up for Sale Next Week

I keep hearing people in this situation crying in the last minute not knowing what to do.

This is a quick guide to give you ideas and options of what to do if you find yourself in this situation.

There’s 2 ways to stay an upcoming sale:

1) File a civil action and get a Temporary Restraining Order and injunctive relief.

2) Declare a bankruptcy for the purpose of delaying the sale (or you may to go through with it anyway)

The Civil Action Strategy

You can initiate a civil action and sue the bank. Specifically, you as a debtor have the right to challenge the bank to produce proof of claim before they can proceed with the sale.

The Trustee is not obliged to stop the sale unless:

a) Ordered by the court through a preliminary injunction or a temporary restraining order

b) Made personally liable for the action through a Notice of Cease and Desist.

Order a Temporary Restraining Order

A Temporary Restraining Order (TRO) only gives you a short stay, typically 10 to 14 days. Judges almost always grant these without too much ado. To file a TRO, you need to first have an open case/civil action. You need to have served the other side with the civil action. You must also notify the other side of your motion for a TRO. You can notify the other party any of the following ways:

1) In person/writing/process server. Serving the notice in their office or presense.

2) In writing via certified mail/courier.

3) Via Fax or email

4) Via telephone. (have a witness)

* Be sure to confirm this with your attorney as each State is different.

Here are some rules of the court you must understand.

1) With each motion, you need an order. In other words, when you submit a Motion for a Temporary Restraining Order, you must also supply the court an “Order for a Temporary Restraining Order”.

2) With each motion submitted to the court, there must be a certificate of service.

3) What you give to the Court, you must give to the Defendant. What you give to the Defendant, you must give to the Court.

The judge have very strict rules for his eyes. He can not “see” your document unless they are in proper order. In other words, if you go to the Judge asking for a TRO but you have not served it to the other party, he can not “see” it. He is forbidden to “see it”. For all intents and purpose, it’s not there. Some friends of mine had their TRO denied and was wondering why this was the case.

Unfortunately, the judge can simply deny your TRO and not explain it to the home owner. He is not really obliged to explain the law to you (sadly).

Elements of a TRO

In order for a TRO to be granted, it must fulfill the 4 elements:

1) If the action were to be allowed to proceed, it will cause greater harm to the victim affected (the moving party).

2) If in granting the motion, the non-moving party is not caused greater harm in the process.

3) Likelihood of success based on the merits. Evidence presented to the court presents the high likelihood of prevailing by the moving party.

4) It is in the public interest.

It is for this reason that you must submit an affidavit in support of your motion. In your original petition, you should build enough evidence in support of your case as to convince the judge of your likelihood of success…or enough controversy. With your affidavit in support of the TRO, you’ve automatically presented superior evidence in support of your case to satisfy the likelihood of prevailing.

Once you file your TRO, you must inform the Court Clerk that you have an emergency and need to have an “ex parte” hearing to have the Judge consider your TRO. The Court Clerk will give you a time and date for the next available time the judge can hear your case. Before the judge sees you, you better have your Motion and Order ready…and SERVED to the other party.

As I said, if you have properly served the other party, and you’ve satisfied the 4 elements of the TRO, you should have very little problem having your TRO granted.

Your TRO is only good for 10 to 14 days.

Once you have your TRO, you should immediately notify the Trustee and the Defendant. I wouldn’t record the TRO at the County because it’s too short lived. County Record is for a more permanent notice.

But It’s Only 10 Days?!

What you need is a preliminary injunction barring the sale. A preliminary injunction is ordered by the court to stay the sale until the controversy is sorted out. You will need to file a “Motion for an Injunctive Relief Barring Sale” and an “Order for an Injunctive Relief Barring Sale”.

The injunction also have the same 4 elements as the TRO.

Once you submit your Motion, the court can take a while to grant your motion. This is why you need another motion called the “Motion for Shortening Time for an Ex Parte Hearing”.

Sheesh! Another Motion? Yep.

Like anything, with any motion, you also need an order. What you submit to the court, you must submit to the other side.

In other words, instead of deciding whether or not to grant your Injunctive Relief in 3 weeks time, the court will agree to hear your motion in a few days.

The point of this hearing is not to plea your case. It is to see if there is sufficient evidence and controversy to grant your motion of Injunctive Relief to allow for “discovery”.

Again, if you have properly serviced the non-moving party and you’ve satisfied the 4 elements of the Injunctive Relief, you should not have too much of a problem with getting the Injunctive Relief.

Once your Motion is Granted, the Judge will sign your Order.

Take your Order, and notify the Defendant and the Trustee.

You should now file it with the County Recorder’s Office.

Unless the Judge stipulates otherwise, this injunctive relief is in place until the outcome of the case is determined.

I’ve included all the documents you need to file for a TRO/Injunction in my kit.  Click here for more information.

The Bankruptcy Method

The problem with the TRO/Injunctive relief method is that it is very hard to have it granted.  The key to granting the TRO is the element of “likelihood of success based on merits”.  Almost always, the bank will file a motion objecting to this.  The other problem with this method is that it is risky.  If the Judge does not grant the motion, you’re screwed.

In my experience, what many people are doing that works is to file for bankruptcy.  A bankruptcy GUARANTEES that the sale is stopped. There’s not permission required from a judge.  If you know what you are doing, you can have the bankruptcy drag out for months (in one case I know of, 2 yrs and still counting).

Objection 1: But I don’t want to damage my credit

Look, there is a difference between filing for bankruptcy and fully discharging your BK (ie. completing it).  That said, worrying about your credit while you are in foreclosure is like fretting over spilling your wine on an airplane while both engines are on fire.  Put things into perspective.  Besides, there are ways to remove derogatory items from your credit report anyway.

Objection 2: But I’ve filed BK in the last 7 yrs.

When you talk to a lawyer…they are required to tell you that you can not file for bankruptcy if you have filed in the last 7 yrs.  That said, the facts are…if you file for bankruptcy…you get to stay in your house indefinitely.  If you don’t you will have to try for an injunction…or lose your house.  Your choices are pretty straight forward.  Painful…but simple.

What happens if you’ve filed BK in the last 7 yrs and are filing again?  Your case will likely be dismissed in a few months…. let me repeat it in case you missed it.  You still get to stay in your house for a few months….

Objection 3: I Can’t Afford a Lawyer

Chances are, when you are in preforeclosure, you are struggling financially.  Hiring a Bankruptcy lawyer will likely set you back a few thousand dollars.  Most people can not afford this.  Besides, you don’t want to hire lawyers anyway.  Here’s why.  A lawyer is required to fill out the paperwork as quickly and as properly as possible.  His job is to get your BK discharged asap.

My friend hired a lawyer for $3000.  Two weeks later, the lawyer stuck her for $4200…and they are not even done!  I don’t trust lawyers.

Learn to do it yourself.  I am not going to lie to you.  It is complicated and it is a pain in the A S S.  I’ve spent over 50 hours working on my own documents. However, in bankruptcy court…the court and judge are much more lenient on pro se debtors.  Here’s a great site that I used to do my own bankruptcy: http://www.legalconsumer.com/

The other alternative is to hire a document preparer who specializes in filing bankruptcy documents.  It is a hell of lot cheaper…and in all likelihood, they can work with you to accommodate your goal (of stretching out the time).

Objection 4: I Don’t Know How to Do It Myself

As I said, filing the paperwork for bankruptcy is not for the weak hearted.  If you don’t feel comfortable doing it yourself or even if you do feel comfortable doing it yourself, chances are you may not know all the provisions and methods available to you to stretch out your bankruptcy.  If this is the case, then hire a document preparer who is willing to work with you.  Google “bankruptcy document preparer”.  The beauty is, since bankruptcy is available nationwide…the laws are for the most part uniform.

Bottom Line

In my experience, the ONLY way to effectively stop a trustee sale is filing for bankruptcy.   The other beauty with being in bankruptcy is that you can also file your civil action inside bankruptcy court under an “adversary proceeding” to demand that the lender produce valid proof of claim.  There is a whole lot more laws available in Bankruptcy court than in other courts.  Most of the winning case laws I’ve studied are from bankruptcy court.  This is especially true for California.

The bottom line is…if you don’t file for bankruptcy, you are going to lose your home.  If you file for Bankruptcy, you will have a few months time to work out your bankruptcy or what ever you need to do.

Recommendation

If you are interested in filing your bankruptcy paper work affordably consider joining our foreclosure defense membership program.  We have resources available that we can direct you to to do it yourself affordably.