Bankruptcy & Foreclosure
Bankruptcy stops a foreclosure
Overview of Bankruptcy and Foreclosure
Facing foreclosure can be overwhelming, threatening your home and your financial stability. Bankruptcy can be a powerful tool to stop foreclosure, protect your property, and give you time to explore long-term solutions.
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How Bankruptcy Stops a Foreclosure
When a bankruptcy case is filed, an automatic stay goes into effect immediately. This stay prevents creditors, including mortgage lenders, from proceeding with foreclosure, filing lawsuits, or taking other collection actions while your case is active.
Chapter 7 & Foreclosure
In Chapter 7 bankruptcy, the automatic stay can temporarily halt foreclosure, giving you time to evaluate your options. However, Chapter 7 does not typically allow long-term repayment of missed mortgage payments. If you want to keep your home, Chapter 13 may be a better choice.
Chapter 13 & Foreclosure
Chapter 13 bankruptcy is often used by homeowners facing foreclosure. Through a court-approved repayment plan, you can:
- Catch up on past-due mortgage payments over three to five years
- Stop foreclosure and prevent the sale of your home
- Potentially modify certain mortgage terms depending on the circumstances
- Protect your home while addressing other debts
Benefits of Filing Bankruptcy in the Event of Foreclosure
Bankruptcy provides the ultimate relief to homeowners whose home is in foreclosure. The filing of the bankruptcy gives homeowners the peace of mind that they will not lose their home.
Why Mezher Law for These Cases
Our goal is not just to stop foreclosure temporarily. We aim to help you regain control of your finances, protect your home whenever possible, and establish a clear path forward for lasting financial stability.
FAQs
A: In most cases, bankruptcy cannot reduce your mortgage principal or interest. However, Chapter 13 can restructure arrears and allow you to pay them over time, which can help you avoid foreclosure.
A: The automatic stay takes effect immediately upon filing and continues while the bankruptcy case is active. In Chapter 13, the stay can remain in place for the full three- to five-year repayment plan, giving you time to resolve arrears.
A: Bankruptcy will impact your credit score, but it may be less damaging than foreclosure alone. Stopping foreclosure and reorganizing your debt can help you rebuild credit over time.
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