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Can filing Bankruptcy delay or stop a Foreclosure?
When you’ve fallen behind on your mortgage payments, you could be at risk for foreclosure. Fortunately, there are ways you can possibly delay or avoid foreclosure on your home. One of these ways is filing for bankruptcy. Both chapter 7 and chapter 13 can possibly help you in delaying or avoiding bankruptcy. Consider the following information and consult a legal professional to help you select the best option for you.
DISCLAIMER: The following blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.
Need Bankruptcy Help?
The process of foreclosure usually won’t begin until you have missed three or four payments on your mortgage. When it begins, the lender has to follow all of your state’s laws and procedures before he or she can sell your home at auction. The money from this sale is applied by the lender to the remainder of your mortgage balance. The collection of a deficiency balance will depend on the laws in your state. However, you have some time to try some solutions such as loan forbearance, a short sale, or a deed instead of foreclosure before the process begins. If none of these work for you, it may be time to consider filing for bankruptcy.
Chapter 7 Delays
When you file for either chapter 7 or chapter 13 bankruptcy, the court automatically issues an order of relief. The order of relief activates “automatic stay”– which temporarily prohibits creditors from pursuing their collection immediately.
Once bankruptcy is filed, the court will issue an Order of Relief. The order includes and activates an “automatic stay” that prevents creditors temporarily from trying to collect from you. This is true for either chapter seven or chapter thirteen bankruptcy. If you file for chapter seven after a lender has scheduled a foreclosure sale for your home, the automatic stay will legally postpone the sale for a few months while the bankruptcy is pending. This is not guaranteed to last. If the lender appeals to the court with a motion to lift the automatic stay and it is approved, you will not get the typical three to four months of delay on your foreclosure.
Chapter 13 Help
The only way to be able to keep your home is if you file chapter 13 bankruptcy. Filing chapter 13 means you will pay off your debt with a financial plan which you propose– usually over a period of five years. You will pay your regular mortgage and arrearage (the late unpaid payments), so you’ll need to make sure you have the income to cover both of those payments.
If you think filing for bankruptcy will help you, contact your local professional bankruptcy lawyer to get the expert assistance you need and the best plan and results for your case
DISCLAIMER: The above blog post is just advice, and you will be better served to call David S. Clark with your bankruptcy questions. This blog contains helpful tips and advice, but is not professional legal advice, and shouldn’t treated as such.