Can Bankruptcy Stop Foreclosure?

Filing for bankruptcy protection sometimes can be the best way for debtors to keep their houses and deal with their creditors. One of the advantages of filing bankruptcy is the debtor’s ability to stop foreclosure without creditor acceptance through the automatic stay. The automatic stay is one of the most powerful tools in the arsenal of things a bankruptcy attorney can use to protect the debtor. Immediately after filing bankruptcy the automatic stay is put in place and stops the creditors from all collection and legal actions. This list includes, threatening phone calls, e-mail, letters and all legal actions including foreclosure, lawsuits and wage garnishments.

In today’s economy many people are having trouble making their mortgage payments and might be facing foreclosure. With the failure rate of loan modifications being upwards of 95% an individual has nowhere to turn but to file for bankruptcy. Many people wait too long, hoping that a loan modification will go through before the foreclosure sale date. This leaves the creditor in the driver’s seat controlling the debtor’s destiny on whether or not the foreclosure will go through. Filing for bankruptcy will put the power back in the hands of the debtor.

Filing Chapter 7 bankruptcy might only be a temporary solution, but will give you time to negotiate something with your creditors. One of the main benefits of filing Chapter 7 bankruptcy is the ability to wipe out all your unsecured debts. In unsecured debt is one that’s not secured by any property like credit cards, medical bills and payday loans. There’re many people that would be able to afford their mortgage payment if they weren’t buried under a mountain of credit card bills. Having the ability to wipe out all these debts in your Chapter 7 bankruptcy in some cases will allow the debtor to be able to afford their home. Having this little bit of time might allow the debtor to negotiate paying the back payments and keeping the home.

When looking at Chapter 13 bankruptcy, you will see that it almost seems like it was created with the idea of stopping foreclosure and allowing the debtor to get caught up without losing any property. With the Chapter 13, the debtor and their bankruptcy attorney are required to come up with a feasible 3 to 5 year repayment plan. The repayment of debts are paid by priority with the secured debts getting the top billing. They unsecured debts are paid the crumbs that are left over and if there are any balances left at the end of the payment plan, they will be included in the bankruptcy discharge and be wiped out.

 

Getting answers to those tough bankruptcy questions needs to be thought of before you make a decision when it comes to your financial problems. Finding the answers to help you understand your situation more clearly can help you make an informed decision about filing bankruptcy. Take a minute to call or fill out the form to have a FREE NO OBLIGATION CONSULTATION with a bankruptcy attorney in your area.