Those facing a potential foreclosure are often searching for any options they have to keep their house. The first thing to note is that you do have time to consider your choices. The foreclosure process takes months, and your lender likely won’t begin it until you’ve missed around four mortgage payments.
One option you may be considering is filing for bankruptcy. Perhaps you’ve been missing mortgage payments because of other overwhelming debts. You believe that using bankruptcy to eliminate this debt could help you move forward by making your home affordable again, and you might even be able to get current on your mortgage. How can bankruptcy help in this scenario?
Creating an automatic stay
The first thing bankruptcy does is put the foreclosure process on hold. This gives you additional time, beyond the months typically involved in the foreclosure process. This is accomplished through an automatic stay, which temporarily stops foreclosure proceedings until your bankruptcy case is resolved.
After the bankruptcy case concludes, the automatic stay is lifted, and the foreclosure process can resume. Contrary to popular belief, filing for bankruptcy is not a guaranteed way to prevent foreclosure indefinitely.
However, bankruptcy may help you eliminate some of your other debts, such as medical bills, credit card debt and lines of credit. By reducing your financial obligations, you may be able to put yourself in a better position to keep your home. Keep in mind that after the automatic stay is lifted, further action will still be needed to address the foreclosure.
Navigating a complex situation
This is a complex financial situation with significant implications for your future. Be sure to understand all your legal options.