The personal bankruptcy process can be one of the most effective debt relief options available, particularly for borrowers who have exhausted some of the more traditional options that exist. Apart from providing the debtor with a fresh start and eliminating much of their debt, claiming bankruptcy can also be an effective way to stall the foreclosure process. While you might not be able to save your home outright under Chapter 7, it might be possible under Chapter 13, otherwise known as “reorganization bankruptcy.” As you will learn in the following article, there is such a thing as a stop foreclosure bankruptcy service.
What Is Foreclosure?
The foreclosure process typically occurs after a borrower fails to make their mortgage payments over a specific time period. Once this occurs the lender begins the legal process of making the home available at auction in order to reach payment on the loan. The process typically involves a multitude of steps, and it never happens without the homeowner being notified. In other words, foreclosure isn’t something that just happens overnight. After all, it’s in the lender’s best interest to the borrower make payments on the loan, as the auction process is both costly and time-consuming for the lender.
If you’ve tried to get back on track through traditional debt relief options, but still cannot make your mortgage payments then it might be time to consider the personal bankruptcy process. Listed below are some of the ways that bankruptcy might be able to help you stall or stop the foreclosure process.
Delay Foreclosure Through Automatic Stay
Regardless of the type of bankruptcy claim you choose to file, the court will issue what it known as an “automatic stay,” which essentially limits the ability of creditors and lenders to seek repayment on money that is owed. The lenders are prevented from making contact and pursuing collections with the debtor while bankruptcy proceedings are underway. In other words, if your home is scheduled to be auctioned through foreclosure, the sale will be postponed for up to 4 months while the bankruptcy is pending. However, there are two important stipulations to be aware of –
1. A lender can choose to enact a “motion to lift the stay,” which means that they may be permitted to move forward with the sale of your home. The good news is that, even if the lender chooses to go this route, simply filing a claim will buy you 1-2 months of time.
2. Filing bankruptcy will not affect a foreclosure notice that has already been filed. In other words, if your lender has already provided you with a specific time table for your foreclosure, filing a bankruptcy claim will not reduce or alter this time table.
Avoid Foreclosure With Chapter 13
When it comes to filing bankruptcy, the only way to retain your home is through Chapter 13. Also known as “reorganization bankruptcy,” Chapter 13 allows the debtor to construct a repayment plan to pay back their creditors. In the case that a debtor seeks to avoid foreclosure, Chapter 13 will allow them to pay back their late payments over a period of 3-5 years. However, the issue that most debtors face is that they must continue to make their current mortgage payment while paying back late payments under the repayment plan. Obviously, you need to ensure that you have the income to make this type of plan work before you can proceed.
For more information on stopping foreclosure through the personal bankruptcy process, consider consulting with a stop foreclosure bankruptcy service. Alternatively, you may also wish to set up an initial consultation with a reputable bankruptcy attorney in your area. Please click on the following link for information on a 2nd bankruptcy mortgage.