Foreclosure is a frightening and overwhelming experience. It’s something nobody wants, but for some, it’s unavoidable. Luckily, you have options.
For some bankruptcy is the best route. Will bankruptcy stop foreclosure?
It can, but it’s not always a simple process. When you’re behind on your mortgage payments, it’s important to understand all of your options so that you can make the best decision for your financial future.
Here’s what you need to know.
Bankruptcy Stops Foreclosure Proceedings Temporarily
When you file for bankruptcy, the court issues an automatic stay.
The automatic stay is an injunction that stops all collection efforts by creditors against a debtor who has filed for bankruptcy. It prohibits creditors from:
- Contacting you
- Sending you bills or notices of delinquency
- Initiating any lawsuits against them
The court’s restrictions include any action that would lead to the repossession of an asset or seizure of property. The automatic stay will also halt any eviction proceedings or foreclosure attempts while it is in effect.
The purpose of the automatic stay is to provide debtors with some breathing room while their case is being heard in court. The idea is to give them time to reorganize their finances so they can pay off their debts over time rather than having to come up with a lump sum payment immediately. It also gives them some protection from aggressive creditors who might otherwise try to seize their assets before they have had a chance to file for bankruptcy protection.
How Long Does an Automatic Stay Last?
In most cases, the automatic stay remains in effect until your case has been resolved in court. Depending on how complicated the case is, this could take anywhere from several weeks to several months or even years.
While the stay is in effect, creditors cannot take any action against you. They must wait until after your case has been decided before they can attempt to collect any money owed to them by the debtor. In some cases, a judge may order an extension of the stay if there are still unresolved issues that need more time to be addressed before a final decision can be made about how much money should be paid back and when it should be paid back by.
Remember, every case is different. There are instances in which creditors have more opportunities than usual to act against you. Much of this depends on where you are in the foreclosure process when you file for bankruptcy. When in doubt, it’s always best to contact a bankruptcy attorney sooner rather than later.
What are Your Options after Bankruptcy?
If bankruptcy doesn’t resolve your issue regarding foreclosure, you have other options.
The most common solution is a loan modification which would allow homeowners to lower their monthly payments and/or interest rate to make them more manageable. Other options include:
- Refinancing your mortgage loan
- Forbearance agreements
- Alternate repayment plans
All of these can help you stay in your home and avoid foreclosure proceedings.
Ultimately, it’s important to contact an experienced attorney who can guide you through the process of filing for bankruptcy as well as provide advice about other potential options like loan modifications or refinancing if needed. Understanding how each option applies to individual cases takes specialized knowledge. This is why seeking expert advice is key before taking any action regarding bankruptcy and foreclosure.
For more information or to schedule a consultation to discuss the threat of foreclosure you’re facing, contact R. Flay Cabiness, II, P.C. at (912) 417-5041 (Brunswick, GA); (912) 809-2141 (Hazlehurst, GA) or; (912) 324-3176 (Jesup, GA) to schedule a consultation.
