If you have gotten behind on your mortgage payments and fear that you may lose your home to a foreclosure, filing for bankruptcy may help. In many situations, filing a Chapter 7 bankruptcy can give you some more time to move or sell your house. If you want to avoid foreclosure and keep your home, then a Chapter 13 bankruptcy could be your solution. There are a variety of things to consider when filing for bankruptcy to avoid a foreclosure, including your marital status, the amount of arrears on your mortgage, what you plan to do with the home, etc. Make sure to consult with an attorney to discuss your situation.
The foreclosure process generally begins after a homeowner falls behind on mortgage payments. The lender will begin the legal process to sell the home at auction so that it can get payment on the loan. Multiple steps are included, such as homeowner notification, and the process generally takes several months to be initiated. During this time, you can try alternative measures to avoid foreclosure, such as a short sale or loan forbearance, but if these measures have failed, you may want to consider a bankruptcy filing.
Stopping a Foreclosure with the Automatic Stay
When you decide to file for bankruptcy, whether you are choosing to file Chapter 7 or Chapter 13, the court will automatically issue an order for relief that includes an automatic stay. The automatic stay will instruct your creditors to stop collecting on any debts, so if your home is scheduled to be sold in foreclosure, the sale will be postponed or canceled. Unfortunately, if the foreclosure sale has already taken place, a bankruptcy will not protect your house.
How Bankruptcy Can Help with Your Foreclosure
If you are behind in your mortgage payments and it seems as though a foreclosure is inevitable, filing for a Chapter 13 bankruptcy may be the only way to keep your home. This will allow you to pay the late payments over time, but you’ll need to have enough income to make your current mortgage payment while repaying the arrearage. A Chapter 13 may also drastically reduce the amount you have to pay back to the creditors. This will allow you to use your money to take care of your mortgage.
Filing for Bankruptcy when Married and Foreclosure
Most married couples who are going through a bankruptcy situation question whether one or both spouses need to file for bankruptcy in order to stop a foreclosure and to save their home. The fact is that only one person will need to file for bankruptcy to stop a scheduled foreclosure sale as long as that person is on title to the house. If both spouses are on the title to the home, you will have the option of both filings or you can simply submit one bankruptcy filing.
If you have additional questions about how your marital status might affect your bankruptcy filing or your ability to save your home in a foreclosure situation, contact Robert Eder at 801-265-1836 for guidance.