If you’re facing foreclosure, you’re likely looking for ways to prevent it. Often, a lender will file for foreclosure after a series of missed payments – not just one. So your goal may be to get current on those payments again and prevent the foreclosure from taking place, but you are a few months behind.
One potential tool to use during this process is bankruptcy. If you file for bankruptcy, it’s going to put an automatic stay on your foreclosure case. What does this mean moving forward?
A temporary pause
The best way to think about an automatic stay is that it temporarily pauses your other financial court cases. When you file for bankruptcy, that bankruptcy has to be completed before other cases can continue. This includes the foreclosure proceedings or other actions by creditors, so they are halted until the conclusion of the bankruptcy case.
This can buy you some extra time because it may take months before the foreclosure can start again. However, the automatic stay will eventually be lifted, so it doesn’t prevent foreclosure entirely.
The key is to use bankruptcy to re-organize your finances or eliminate other debt. Ideally, you can then pay off what you owe on those back mortgage payments, get current again and budget to make future payments affordable. By taking these steps, you make it vastly more likely that you’ll get to keep your house.
Working through the bankruptcy process
Are you navigating a complex financial situation and wondering how bankruptcy may help? Be sure you know of all the legal options at your disposal.