Can Bankruptcy Stop Foreclosure?

People consider bankruptcy when their bills are piling up and they are struggling with debt they cannot repay. If you are in this situation, you may have even missed several mortgage payments. Your lender may have also initiated foreclosure proceedings. The thought of  losing your home is very scary, and a worst-case scenario for most people. You may hope that filing for bankruptcy can help you keep your home and in some cases, that may be true. Below, our Orlando bankruptcy lawyer explains further.

Can Chapter 7 Bankruptcy Stop Foreclosure? 

Chapter 7 bankruptcy is known as a liquidation bankruptcy. During the process, your property is collected and potentially sold to help repay some of your debt. This may include your home, so Chapter 7 will not stop foreclosure or the loss of your home. However, this process can delay the foreclosure and help you become free of other debt, which can make repaying your overdue mortgage payments easier.

At the beginning of any bankruptcy case, the court will immediately issue an automatic stay. The automatic stay stops creditors and debt collectors from pursuing debt collection efforts, including your mortgage lender. They cannot contact you regarding  the debt, file a lawsuit against you, or attempt to collect the debt. If your mortgage lender wants to start foreclosure  proceedings, they will have to file a lawsuit against you. The automatic stay will prevent this from happening.

It is important to keep in mind, though, that once your bankruptcy case is finalized, your lender may continue with foreclosure if you do not meet the requirements to keep your home.

Can Chapter 13 Bankruptcy Stop Foreclosure? 

A Chapter 13 bankruptcy is vastly different from Chapter 7. More people qualify for this type of bankruptcy. Instead of having your debt discharged, it is reorganized into a repayment plan. These plans range from three to five years. The length of these plans can make it easier to repay your debt. Your overdue mortgage payments can also be distributed throughout the plan. This can help save your home from foreclosure. There are, however, other factors to consider.

You must be able to make the monthly payments outlined in the Chapter 13 repayment plan. If you do not, the court can dismiss your case and you will be responsible for repaying all of your debt immediately. If you are unable to do this, your mortgage lender can then file a lawsuit against you to foreclose. You must also be able to pay your current payments, so it is important to determine if you can afford them.

Like in Chapter 7, the court will issue an automatic stay when you file for Chapter 13. If the threat of foreclosure is imminent, it can help you stop foreclosure proceedings and possibly get caught up with your payments.

Call Our Bankruptcy Lawyer in Orlando Today 

When considering bankruptcy to stop foreclosure, it is critical that you work with an Orlando bankruptcy lawyer. At Anderson & Ferrin, P.A., our experienced attorney can advise on the type of bankruptcy best for your case and guide you through the process so no mistakes are made and so it is as easy as possible for you. Call us now at 407-412-7041 or contact us online to schedule a consultation.

Source:

uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics