If you’re at risk of losing your home you may be wondering “Can I Stop Home Foreclosure?”
“Bankruptcy can be a powerful tool for people who are behind on payments. When you file, an automatic stay is issued which forces your creditors to immediately stop contacting or conducting any collections actions against you- this means that even if they’re pursuing legal action such as wage garnishing (a common practice), it will now become ineffective because there isn’t enough money coming from anywhere near where we send our wages!
Bankruptcy will get rid of most, if not all, of your debts, which will free up more money for you to be able to attempt to save your home through a Chapter 13, a loan modification, or some other avenue that a local bankruptcy attorney can explain to you.
Chapter 13 Bankruptcy and Home Foreclosure
Chapter 13 bankruptcy allows you to pay off your late mortgage payments, called arrearage, over the course of a repayment plan, which can be as long as five years in some cases. You and your attorney have a lot of say in what this payment will be, rather than have the mortgage company force you into something you cannot afford. The best part of the payment plan is that you pay the arrearage back with no interest, late fees, or other penalties accruing, which can save you a lot of money over the five year period. You will also need to remain current with your future mortgage payments while in the case. If you are able to keep up with both payments, you will be able to keep your home and avoid foreclosure.
Chapter 7 Bankruptcy and Home Foreclosure
Chapter 7 bankruptcy may not save your home, but it will delay foreclosure and give you more time to work with your lender or to find another place to go. Filing for Chapter 7 bankruptcy will automatically stop the foreclosure for a period of time, but the lender may file a Motion for Relief from the Automatic Stay, which will allow them to go back to state court and resume the foreclosure. At a minimum, filing a Chapter 7 will stall the foreclosure for 45 days, but quite often it can be longer. A Chapter 7 is not the complete answer, as it cannot save your home like a Chapter 13 can, but it is a powerful tool to prove you more time to investigate other alternatives.