Can I Stop Foreclosure By Filing Bankruptcy?

Sometimes people have to choose between filing bankruptcy or letting their mortgage lender foreclose on their property. However, it is not as simple as a case of either /or and a decision cannot be made this easily. A mortgage lender will initiate a foreclosure proceeding if the monthly mortgage payments fail to be met. There is only one way to stop this from happening and that is pay the mortgage lender. The loan for a mortgage is similar to an automobile loan; when an individual fails to make his automobile payment, the vehicle is taken from him by being repossessed. If you fail to make your monthly mortgage payments you too, could lose your home to foreclosure.

The definition of bankruptcy is to file legal paperwork to resolve an inability to pay debts. While the debtor is going through bankruptcy, this step puts an end to anyone engaged in civil proceedings. Therefore, according to law, the mortgage lender must stop all legal action (including foreclosure). However, a mortgage lender can file for relief from the automatic stay, and when the relief is granted, simply proceed with the aforementioned action. Declaring bankruptcy will not halt foreclosure and you still must repay your loan. Bankruptcy may make your financial problems easier to handle, but it will not make them completely go away.

While bankruptcy doesn’t stop foreclosure, it gives a person time to repay or at least makes it easier to catch up with the mortgage lender. Because bankruptcy forces a mortgage lender to stop the foreclosure proceeding, it gives the debtor additional time to come up with funds to repay the lender. Bankruptcy allows you to discharge unsecured debt which may enable you to have more money to pay the mortgage payments.

The last resort for any debtor who is unable to keep up his repayment schedule at the prevailing circumstances, is to declare insolvency or bankruptcy to avoid further consequences. Under such circumstances, the court, based on financial details submitted by the creditor, may permit the debtor to repay the loan over a period of time by designated installments under Chapter 13 of the bankruptcy law.

Sadly, not every person will be eligible for bankruptcy, and even if they are found eligible, there are still legal costs. The legal costs and fees may be more than the amount needed to catch up and make current mortgage payments. If you are of the mind that declaring bankruptcy may benefit your situation and help you get out of a foreclosure, a good lawyer should be able to answer your questions. Bankruptcy is so detailed that you should not try to handle it by yourself.

Stop foreclosure on your home, find out the steps of foreclosure so you can be informed.