Legal Question in Bankruptcy in California

The lender does not need to re-file NOD because it has already filed one with the county and started the foreclosure. Your parents filed Ch-7 most likely to stop the sale. They filed the wrong chapter. They should have filed a Ch-13 if they really wanted to keep the house and proposed a plan to repay the arrearages. However, they may still have some options to save the house. You need to consult a bankruptcy attorney.

The lender has to follow California law to foreclose. First a notice of default and then the notice of trustee's sale. If no NOD yet served then one has to be served. If NOD already served and the 90 days are up then next will come the notice of trustee's sale. If there was a trustee's sale already set before your parents filed for bankruptcy then they obviously already served the NOD and the 90 days had already expired so now the notice of trustee's sale will be coming. A Chapter 13 would allow your parents to pay the arrearage on the house over up to five years but they would have to start making regular mortgage payments again immediately after filing. Your parents can file a motion to convert the case to a Chapter 13 case if they can afford to pay the arrearage in a Chapter 13 Plan and start making mortgage payments again. Your parents need to consult with a local bankruptcy attorney immediately.

It is true that the lender does not need to re-file the NOD, however, California Civil Code 2924 g does set a limit on postponements at 365 days from the date in the notice of sale. If your parents went through with a run of the mill chapter 7, it is doubtful that the sale has been postponed enough times to be running up against the 365 day deadline, but if it had previously been postponed due to failed modification or short sale attempts, it is a possibility. If they have gone past 365 days from the original sale date, the lender will have to will have to post and file a new notice of trustee sale, but they will not need a new NOD.

Additionally, there is the possibility of your parents filing a chapter 13 (a second filing, not a conversion) in order to deal with just the mortgage issue. In BK attorney slang, this is referred to as a chapter 20. They would not be entitled to a discharge in the 13 because of receiving one in the 7, but it would allow them to make mortgage payments and catch up on the default. This is quite a bit more complex than a garden variety 7, so they will definitely want an experienced attorney.