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Can bankruptcy help when facing foreclosure?

On Behalf of | Jul 9, 2024 | Chapter 7

If you’ve missed payments on your mortgage, you are likely worried about losing your home. Perhaps you’ve even gotten notifications from the lender telling you that you have an outstanding balance due. If you do not get caught up on your back payments, they are going to foreclose and take your home.

You have been having significant financial trouble in many areas, dealing with an overwhelming amount of debt. You would like to save your home and ensure that your family still has a place to live. Could filing for bankruptcy help you during this process?

An automatic stay

Bankruptcy can help initially because of the automatic stay that the court creates when you file for bankruptcy. Essentially, if you have other financial cases going on – like foreclosure proceedings – they are not allowed to continue until the end of the bankruptcy case. So the automatic stay puts everything else on pause. If it takes you the next six months to go through bankruptcy, this gives you more time in your home.

Eventually, though, that automatic stay will be lifted. In this sense, bankruptcy is not necessarily a way to keep your home for good. However, by using bankruptcy to eliminate some of your debt – or perhaps consolidate your debt into a repayment plan – then you may be able to get caught back up on your mortgage payments. Handling the rest of your debt actually makes it possible for you to keep your home.

It’s important to understand all of your legal options and the steps you will need to take when using bankruptcy. At this time, it may be beneficial to have experienced legal guidance on your side.