I’ve been Served with a Foreclosure, Should I Move Out Immediately?

Common Question: I’ve been served with a foreclosure, should I move out immedately?

Answer: Don’t move out until a sale date is set, unless you have some other reason to move, like a job in another city. The foreclosure may take months or even years–especially if a bankruptcy is filed or the the foreclosure is disputed by the borrower.

Sometimes people file bankruptcy, indicate an intention to surrender their home, and move out. Yet banks don’t initiate a foreclosure for several YEARS. That means that homeowners may be liable for HOA fees or city water bills that accrue following their bankruptcy. Bankruptcy wipes away debt that exists at the time of the bankruptcy, it does not transfer ownership. That only occurs in a foreclosure, short sale, or deed transfer.

The reason for this is that federal courts do not have jurisdiction over property ownership, just bankruptcy and debt discharge. Only state courts have jurisdiction over foreclosure, wills, and other property related legal matters. After a person files bankruptcy, and the bankruptcy stay is lifted after the debts are discharged, state courts must still finish processing any pending foreclosures.