Chapter 13 bankruptcy debtor Idolia M. Avila, age 71, owns a triplex worth $300,000. It is subject to a $178,916 first mortgage.

Avila’s bankruptcy reorganization plan requires her to pay $1,339 monthly to mortgage lender Citifinancial Mortgage. But she has failed to make those payments.

Purchase Bob Bruss reports online.

The mortgage lender was granted relief from Avila’s automatic bankruptcy stay to begin foreclosure proceedings. Now, Citifinancial Mortgage requests permission of the U.S. Bankruptcy Court to complete its foreclosure sale.

However, Avila’s attorney emphasized she has at least 40 percent equity in this property so the mortgage lender has virtually no risk of a foreclosure loss by allowing her more time to either refinance or sell the property.

If you were the judge would you grant the mortgage lender relief from the automatic bankruptcy stay to proceed with its foreclosure sale?

The judge said no!

The evidence shows bankruptcy debtor Avila has a large equity in her residential property, the judge began. Although she has not made the monthly payments she promised to pay under her Chapter 13 bankruptcy reorganization plan, he continued, allowing the lender to foreclose would be a substantial forfeiture.

“An equity cushion provides adequate protection although not a single mortgage payment has been made. Here, Citifinancial Mortgage is adequately protected by an equity cushion of 40 percent so relief based on the lack of adequate protection is not appropriate,” the judge ruled. The mortgage lender may not proceed with the foreclosure sale of Avila’s property, he concluded.

Based on the 2004 U.S. Bankruptcy Court decision in In Re Avila, 311 B.R. 81.

(For more information on Bob Bruss publications, visit his
Real Estate Center


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