Can Bankruptcy Stop Foreclosure?

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If you have missed mortgage payments and cannot catch back up, the bank might be ready to enter the foreclosure process. You don’t want to lose your home, but you don’t know what the other options are. A Bergen County bankruptcy lawyer from our firm may be able to help you. Filing for bankruptcy could help you save your home.

How Does Bankruptcy Stop the Foreclosure Process?

Bankruptcy can stop the foreclosure process because the court issues what’s called an “automatic stay” when you file. This puts a stop to your creditor’s collection activities, and this includes anything that your mortgage holder is doing concerning the foreclosure process.

They cannot ask you for past payments. They cannot ask you for new monthly payments. It’s also difficult for them to try and sell the property out from under you.

It’s important to note that the automatic stay may not be issued if you have a history of abusing the bankruptcy court though. If you’ve tried to file and dismiss bankruptcy cases to make it difficult for creditors to collect, the automatic stay may not protect you. You should also know that the two types of bankruptcy available to most people offer different levels of protection against foreclosure.

Can Chapter 7 Bankruptcy Prevent Foreclosure?

Chapter 7 bankruptcy does not prevent foreclosure, but it can pause the process when the automatic stay is issued. You may get three to four months to negotiate with your lender, but if you have already missed too many payments you may not have much luck.

How Can Chapter 13 Bankruptcy Save My House?

In Chapter 13 bankruptcy, you make a payment plan with your creditors and pay off debt over a period of three to five years. This could stop the foreclosure process and allow you to pay off your missed mortgage payments over time. If you keep up with your current payments along with the payment plan you established during the bankruptcy proceedings, you can keep your home.

Will Foreclosure Hurt My Credit More Than Bankruptcy?

Bankruptcy will probably hurt your credit score more than a foreclosure would. However, bankruptcy also allows you to deal with other debts. If you have medical debt, credit card debt, and other liabilities that have strained you financially, you have the chance to address them. If these debts were the reason why you struggled to pay your mortgage in the first place, dealing with them through Chapter 7 or Chapter 13 bankruptcy can be helpful. A foreclosure would drop your credit score without addressing any of your other debts.

Talk to a Bankruptcy Attorney

If you have questions about the bankruptcy process and how it could stop foreclosure, contact the Law Office of Boyd & Squitieri. We can schedule a consultation and help you learn more about your options.