CAN A BANKRUPTCY FILING STOP A FORECLOSURE?

A bankruptcy filing may be used to stop a pending foreclosure proceeding -- but only temporarily.

How Does the Bankruptcy Filing Affect a Foreclosure Case?

The moment a homeowner files for bankruptcy, an automatic stay goes into place in the underlying foreclosure case. This automatic stay prevents creditors from taking any steps towards collecting on their debts. This means that if there is an upcoming judicial auction, or eviction proceeding, the lender cannot take any action to further their case. However, the automatic bankruptcy stay is only temporary. For some homeowners, the temporary automatic stay gives them enough breathing room to figure out their next steps, but the bankruptcy itself is typically not a permanent solution.

Should a Homeowner File a Chapter 7 or Chapter 13 Bankruptcy?

Most homeowners will pursue a Chapter 13 bankruptcy rather than a Chapter 7 liquidation. A Chapter 13 offers homeowners an opportunity to save their homes form foreclosure. However, most Chapter 13 bankruptcies fail. In a Chapter 13, debts are generally consolidated and repaid through a repayment plan over the course of 3-5 years. A homeowner will still need to make mortgage payments along with the consolidated debts in the Chapter 13 (which include any missed mortgage payments, along with related fees or penalties). For this reason, the monthly payments under a Chapter 13 bankruptcies are usually unaffordable for homeowners. And when the Chapter 13 bankruptcy fails, the homeowner will still need to deal with the foreclosure.

If you would like to learn more about the saving your home after a failed bankruptcy, an experienced attorney can help you navigate the process. At The Law Center, we are a team of specialists that are passionate about the foreclosure process from start to finish and helping homeowners at the highest level. Our staff and attorneys approach each client and each property as a new challenge, one that requires thorough analysis, zealous representation, and thoughtful strategy. It’s your home, let The Law Center help you defend it.

Call us now and speak with a foreclosure expert on how you can make the foreclosure process work for you -- not against you. (312) 600-8815

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