Can Bankruptcy Help with Foreclosure? Absolutely.
Many people are under the impression that filing for bankruptcy will put them out on the street. While it is true that Bankruptcy can have an impact on your home, the filing of a bankruptcy does not put you out on the street.
It is important to realize that every situation is unique.
Did you know that bankruptcy can help by immediately putting a stop to the foreclosure?
If you find yourself in a bad position, such as a lender that is threatening foreclosure, you may find that filing for bankruptcy would be your best option.
The Automatic Stay
No matter if you file Chapter 7 or Chapter 13 bankruptcy, upon doing so the court issues an order, known as the order for relief, which includes the automatic stay.
In short, this means that creditors are required by law to stop all collection activities. If your home is in the foreclosure process, this will put it on hold.
Chapter 7 will typically stop the foreclosure for several months.
Chapter 13 can put a permanent stop to the foreclosure if you are able to resume to paying the mortgage and pay a trustee to cover any amounts that you are in arrears with your mortgage. In some cases, it may be better to pay off the whole mortgage through a Chapter 13 Plan. This will be discussed below.
Keep in mind that there are a couple exceptions to this rule:
- Motion to lift the stay. If the lender takes the step to gain approval from the bankruptcy court to proceed, you may find yourself faced with the foreclosure process again if you filed a Chapter 7 Bankruptcy are unable to get caught up on the mortgage or make an arrangement with the mortgage company?
- You need to file Bankruptcy prior to the Sheriff Sale taking place in Pennsylvania. If a foreclosure sale has already taken place, the filing of a bankruptcy may not be able to save the property.
Chapter 13 is a Solid Option
Are you willing to do whatever you can to stay in your home, despite your less than ideal financial situation? If so, and you have no way of getting current on your payments, you can file Chapter 13 bankruptcy to help your situation along.
With this type of filing, you can make late payments over the course of a repayment plan, which typically lasts three to five years. Remember this: in addition to your repayment plan payment, you must continue to make your regular mortgage payment. If you are able to do so, you can avoid foreclosure.
There is no denying the fact that bankruptcy can help with foreclosure. That being said, there is a lot that goes into this, so it is best to consult with a qualified attorney before making any decisions.
We have helped many homeowners avoid foreclosure through bankruptcy. Contact us for more information on what we can do for you.