Can Bankruptcy Stop Foreclosure?
If financial hardship has put your home at risk for foreclosure, filing bankruptcy may be an option. The process of bankruptcy and foreclosure are often very involved and therefore tend to take months or sometimes years to complete. For this reason, some individuals look to bankruptcy as either a means of buying time to come up with their mortgage debt, or to protect ownership of their homes completely.
When an individual files bankruptcy, whether Chapter 7 or Chapter 13, the bankruptcy court automatically issues an automatic stay. This order puts a hold on and prevents all creditors from making any attempts to collect on missed or overdue payments until the terms of the bankruptcy have been determined. This process can generally take between three to four months. While the bankruptcy may or may not relieve your entire debt, it may buy you the time needed to get current on your overdue payments and late fees.
Keep in mind, filing bankruptcy for the purpose of buying time does not come without its own risks. Whether a bankruptcy is carried out entirely or cancelled before any debts are discharged, the bankruptcy filing will still negatively affect your credit on top of the damage of missed mortgage payments and foreclosure.
Protecting Your Home
Short of a loan modification, forbearance, or coming up with the full amount needed to become current, the likelihood of losing your home to foreclosure or another alternative is generally high. When faced with foreclosure, one sure fire way to protect your ownership of your home is to file Chapter 13 bankruptcy. Through Chapter 13, your debts are simply bundled into a repayment plan extended over a matter of years. You will not lose your home to bankruptcy through Chapter 13, and your mortgage payment will be restructured to where foreclosure is no longer a threat to your home either.
Bankruptcy can be an alternative, or at least a method in delaying foreclosure, but before considering bankruptcy as a way out of an impending foreclosure, be sure to consult an experienced foreclosure defense attorney to discuss all other alternatives to foreclosure. Arranging a loan modification, deed in lieu, or short sale, may be a less damaging way of avoiding foreclosure. To speak with our experienced foreclosure defense attorneys contact our office at (702) 998-1188, email@example.com, or by scheduling a consultation online.
For more information on foreclosure or bankruptcy, check out our LJ Law Blog, podcast, or featured playlists on the LJ Law Youtube channel.