Does Filing Bankruptcy Stop an Ohio Sheriff’s Sale?

We should say at the top where we stand, because it is the opposite of what you might expect from a company that buys houses. If a Chapter 13 plan can cure what you are behind and you want to stay, that is better than selling the house to us. We are one line in the options list near the bottom of this page, and deliberately a late one. What follows is the law as it is written, so that you can read it before you talk to someone who can advise you on it.

What the filing does, the moment it is filed

People describe the automatic stay as something a judge grants. It is not. The statute says a petition "operates as a stay, applicable to all entities" — the filing is the event. Three of the things it stays matter here:

• The commencement or continuation of a judicial proceeding against the debtor that was or could have been commenced before the case began. An Ohio foreclosure is a court case, so continuing it is staying-worthy on this limb alone.
• Any act to create, perfect, or enforce any lien against property of the estate.
• Any act to create, perfect, or enforce against property of the debtor any lien to the extent that the lien secures a claim that arose before the case began.

A sheriff’s sale, or a sale by a private selling officer, is an act to enforce a mortgage lien in a proceeding that started before the filing. It is not a close question. What is a real question — and a practical rather than a legal one — is whether everybody who needs to know about the filing finds out in time. That is a matter of local procedure that we have not read and are not going to describe for you.

The deadline is the sale — and Ohio has a second, later clock

This is the sentence most pages on this subject are paraphrasing without citing. It is short:

Two things are worth noticing. The first is the deadline itself: until the residence is sold. Not until judgment, not until the sale is advertised — the sale. The second is the phrase "applicable nonbankruptcy law", which is how the federal statute points at Ohio’s process without describing it.

And that is where a wrinkle lives that we have not seen anyone set out. Ohio gives a debtor a redemption right that runs until the court confirms the sale — confirmation happens after the sale, sometimes well after. The federal cure right ends at the sale. Those are two different dates and the federal one arrives first. We are not going to tell you how a court reconciles them, because we read both provisions and no case law. We are telling you they exist and that you should not assume the later Ohio date is your bankruptcy deadline.

What a Chapter 13 plan can cure, and the one thing it cannot touch

A plan may "provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending". In plain terms: the arrears get spread across the plan while you keep making the ongoing payment. That is the mechanism behind every "catch up over three to five years" line you have read.

The limit sits one paragraph earlier. A plan may modify the rights of holders of secured claims — other than a claim secured only by a security interest in real property that is the debtor’s principal residence. Your home mortgage is the carved-out case. The arrears can be rescheduled; the loan itself is not rewritten, the rate is not reset, and the balance is not cut down to what the house is worth.

On length, the statute works off the state median family income for a household of your size. Above that line, a plan may not provide for payments over a period longer than five years. Below it, the ceiling is three years unless the court approves a longer period, and even then five is the outer limit. We are not printing the income figures. They move, and we only publish numbers we can point you at.

Summarised from 11 USC 362(a), 1322(b)(2), 1322(b)(5) and 524(a)(2). This is a description of what the provisions say, not a recommendation of a chapter — that choice depends on income, assets, other debts and prior filings, and belongs with a bankruptcy attorney.

Three ways the protection ends sooner than people expect

The stay is powerful and it is not permanent. Three provisions end it, and only the first is well known.

1. 1

   The case ends

2. 2

   The lender asks the court to lift it

3. 3

   You filed before, and that case was dismissed

Chapter 7 does something different

The discharge provision is precise in a way that matters. A discharge "operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor".

Those last five words carry the whole answer. What is discharged is your personal obligation to pay. A mortgage lien is not a personal obligation — it is a claim against the house. So a Chapter 7 discharge can clear what you would otherwise still owe after the property goes, without by itself curing the arrears or removing the lender’s security. It is the right tool for a different problem, and it is why people who want to keep the house are usually pointed at Chapter 13 instead.

Your options, honestly

Six routes exist here, and they are not ranked by what suits us.

• Keep it and cure. If your income supports the ongoing payment plus a share of the arrears, this is the route that ends with you still owning the house. It is first on this list for a reason.
• Keep it and work with the servicer. Modification, forbearance and repayment plans exist outside bankruptcy. A HUD-approved housing counselling agency costs you nothing to talk to.
• Repair and list. If the house needs work and you have time and money for it, a repaired house on the open market is where the highest price usually is. Ohio commissions generally run 5.5% to 6%.
• Rent it. If the mortgage is affordable against local rents, letting it carry itself is a real option — though being a landlord under financial pressure is its own job.
• List it as it stands. A sale on the open market before the sale date, as-is, with the debt paid from the proceeds. Slower, usually higher gross, commissions and holding costs come off the top.
• Sell direct. A cash sale with no commissions and no repairs, which can close as fast as 7 days where the title is clean and typically lands around 21. The price is below retail. Whether that trade is right depends entirely on the net.

Where this leaves you

If there is one thing to take from this page, it is a date. The federal cure right ends when the house is sold, and Ohio’s redemption window ends later, at confirmation. Knowing which one you are working to is worth more than any general advice about bankruptcy, and it is the first thing worth establishing with an attorney.

The second thing is that a prior dismissed case changes the picture completely. Thirty days is a real amount of time, but it is not what most people think they are getting, and the motion to extend has to be finished inside it.

And the third is that selling is not the only way out of this, which is a strange thing for us to write and true anyway. If the plan works, take the plan. If you have looked at it honestly and the payment is not there, then selling before the sale date preserves whatever equity exists rather than letting the process decide — and our article on selling before a foreclosure walks through the Ohio deadlines that apply to that route.