Summary
The United States District Court for the District of Maryland affirmed the Bankruptcy Court's order granting Wilmington Savings Fund Society relief from the automatic stay in connection with a foreclosure sale. The court held that David A. Fair had no right of redemption after the foreclosure auction under Maryland law and 11 U.S.C. § 1322(c)(1), even though the sale had not yet been ratified. The court dismissed the bankruptcy appeal.
Topics
Practice areas
Questions Presented
- Whether a Chapter 13 debtor retains a right of redemption in Maryland after the foreclosure-sale auction but before ratification of the sale.
- Whether 11 U.S.C. § 1322(c)(1) permits a debtor to cure a mortgage default by filing a Chapter 13 petition after the foreclosure sale but before ratification.
- Whether the Bankruptcy Court properly granted Wilmington Savings relief from the automatic stay.
Holdings
- Under Maryland law, a debtor's right of redemption terminates when the foreclosure-sale auction concludes and the auctioneer's gavel falls, even if the foreclosure sale has not yet been ratified.
- Section 1322(c)(1) permits a debtor to cure a mortgage default only until the residence is sold at a foreclosure sale conducted in accordance with applicable nonbankruptcy law; it does not create a post-sale right of redemption.
- The Bankruptcy Court properly granted Wilmington Savings relief from the automatic stay because Fair had no remaining right of redemption in the property after the foreclosure sale.
Key quotations
“A finding is clearly erroneous only if, after reviewing the record, the reviewing court is left with “a firm and definite conviction that a mistake has been committed.”” (Section III.A)
“Section 1322(c)(1) . . . affords the debtor an opportunity cure a default on her principal residence by filing a petition under Chapter 13 of the Bankruptcy Code before the foreclosure auction takes place,” (Section III.C)
“A petition filed subsequent to the falling of the auctioneer’s gavel simply comes too late.” (Section III.C)
Factual background
David A. Fair and Noreen Fair owned a Damascus, Maryland property encumbered by a mortgage loan. They defaulted, and the property was sold to a third-party purchaser at a foreclosure sale on November 4, 2024. Fair filed a Chapter 13 bankruptcy petition on November 6, 2024, after the foreclosure sale but before ratification, and Wilmington Savings obtained relief from the automatic stay to proceed with ratification.
Procedural history
David A. Fair and Noreen Fair owned the property subject to a deed of trust and promissory note. After default, the property was sold at a foreclosure sale on November 4, 2024. Fair filed a Chapter 13 petition two days later, and Wilmington Savings moved for relief from the automatic stay. The Bankruptcy Court granted that motion on February 12, 2025. Fair appealed, and the District Court affirmed the stay-relief order and dismissed the appeal.