If you are wondering if bankruptcy can stop foreclosure, you are not alone. Fortunately, you have options like will Filing for Bankruptcy.
What is Foreclosure?
The process of foreclosure usually begins after falling behind on mortgage payments. Next, the lender will prepare to sell the home at auction. The money collected through the auction is then applied to the mortgage balance.
How Bankruptcy Can Help?
An automatic stay begins when a bankruptcy is filed. The automatic stay is a court-ordered injunction that helps to protect you from creditors. It also legally allows consumers to retain their properties while working out a resolution for their debt.
If your home has already been scheduled for foreclosure, Will Filing for Bankruptcy Chapter 7 will legally postpone the sale while your bankruptcy is pending. A trustee is appointed to sell off assets not marked exempt. So, the resulting money is used to repay your creditors. With the automatic stay, the trustee has time to sell off your property instead of foreclosing.
With Chapter 13, an automatic stay is placed to give time for restructuring debts. Meaning, your home can be saved. In Chapter 13, you are given a three to five year period to resolve your delinquent accounts. During this time, you will be able to pay arrearages on your mortgage loan.