The foreclosure process can take months to get through, and that’s not even counting the months of missed payments before the lender initiates foreclosure in the first place. This gives you some time to consider all the options that you have.
However, you may know that drastic action needs to be taken and that you need even more time to get things in order. One way to do this is by using bankruptcy to pause the foreclosure.
How does this work?
Any time that you declare bankruptcy, an automatic stay is created for any other financial court cases that are occurring. This includes a bankruptcy case or other collection efforts.
The automatic stay then remains in place until the court has gone through and finalized your bankruptcy. This can take months to occur, and your house cannot be foreclosed upon until it’s over. This is how using bankruptcy, often through Chapter 7 or Chapter 13, can pause the foreclosure and allow you to keep your home longer.
If you want to keep your home even after the automatic stay is lifted, bankruptcy may also help in a case like that. For instance, perhaps your medical bills and credit card debt are so high that you can’t pay the mortgage, even though you have an income. By reorganizing your debt and consolidating it into a payment plan, or by liquidating assets and eliminating some of the debt that you hold, you may bring your monthly obligations down far enough that the mortgage is once again affordable.
If you’re facing any of these financial issues, you can see how important it is to understand all of your legal options and the potential advantages that they provide.