Foreclosure can be frightening to say the least. Lets de-mystify it a bit...
First, remember this - if you file for Bankruptcy protection, the debt you owe on the home will be discharged in the bankruptcy. You can just walk away.
What is the purpose of foreclosure? ANSWER: The bank needs to file foreclosure to obtain legal title to your land, and to be given permission to sell it.
So what happens in the foreclosure?
1. Foreclosure can take up to (or more than!) a year to get you out of the home.
2. The bank will serve you with foreclosure documents.
3. You can file an "answer" to the foreclosure and request mediation with the bank to see if you can modify your loan.
4. If the mediation does not work, or if you do not answer, the bank will file a "motion for summary judgment". The motion basically says: "Judge - the guys in the home haven't paid us. We want to sell it. When we've sold it we'll tell you how much we lost. Can we have permission to sell it?" If you don't answer, the judge will grant the motion and a judgement of foreclosure will be signed.
5. You have 90 DAYS from the date of the signed foreclosure order before the bank is allowed to sell the home. This is called the "Redemption Period." You can file a chapter 13 bankruptcy at ANY TIME in this period to save the house!
6. Once the 90 days have gone by, the bank will sell the house at auction. They will list the property for sale in your local newspaper, conduct an auction and sell the property. At that point, and that point only - after the sale is complete - you no longer own the home.
At any time you can file bankruptcy to discharge the debt on the home. To save your home, you have to file bankruptcy before the auction.