How Can Bankruptcy Stop a Foreclosure?

Martin Long • Jun 12, 2018

Having trouble keeping up with mortgage payments? Experiencing a financial hardship? Consult with a bankruptcy lawyer immediately. Depending on your situation, bankruptcy may be your best option. If you anticipate your home being foreclosed on, you can use your bankruptcy application to stop the action.

What is a foreclosure?

When a homeowner fails to make multiple mortgage payments on a house, the lender may foreclose on the property. This means that your house will be placed up for auction by the bank in order to satisfy the debt. However, the foreclosure process takes time and you will be notified before any action is taken.

Alternatives to foreclosure

If you are having trouble making mortgage payments and believe foreclosure is forthcoming, you may want to try one of these options first:

  • Loan forbearance: If you have suffered a recent hardship, your lender may agree to suspend or reduce mortgage payments for a specified period of time.
  • Short sale: Your lender may also agree to sell your home for less than the outstanding mortgage on it. This is beneficial to you because it prevents any damage to your credit rating.
  • Deed in lieu of foreclosure: If there are no liens on your property, you may be allowed to voluntarily transfer the deed of your house to the bank to satisfy the outstanding debt.

Foreclosure is your last option. A skilled lawyer can protect your rights and help you navigate the law.

Automatic stay

When you file for Chapter 7 an “automatic stay” goes into effect which halts all collection attempts by creditors. This also includes any foreclosure sale, albeit temporarily. When you file for Chapter 13 before the sale, however, you can usually stop the foreclosure sale, pay any arrearage you owe the mortgage lender through the Chapter 13 plan, and most importantly, keep your home. In the Chapter 13 plan you continue to make timely mortgage payments. As a result, in most cases at the end of your Chapter 13 plan you are fully caught up on the house payments and keep your home.

A knowledgeable Denver bankruptcy attorney can help

Bankruptcy can help you find relief from debt so you can rebuild your life. At Long & Long P.C., located in metro Denver locations, and with over 30 years’ experience, and a former bankruptcy court trustee, our trusted lawyers work tirelessly to help you achieve a positive outcome in your bankruptcy case.


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A joint petition is when a married couple together files a single bankruptcy case. Unless noted otherwise in the statutes, if a married couple files jointly in Colorado, each spouse may claim the full amount of each exemption. The favorable effect of this is that the couple can claim twice the amount of exemptions. Unmarried couples, partnerships, and corporations must file separate petitions. If you are an individual and have a business entity, such as an LLC or a partnership, you cannot file a single petition for yourself and that business. In such a case you will note your interest in your company in your individual filing, e.g., John Doe, a member of Doe, LLC. If you are a sole proprietor, however, you may include your 100% ownership of the business in your individual bankruptcy. Once a joint petition is filed, all property and debts between the two individuals in the marriage become part of the bankruptcy filing. Sometimes it may be advisable for one spouse to file a petition alone and without the other spouse. An example is when the debts are owed only by the filing spouse, and not the non-filing spouse. Though the non-filing spouse is not part of the bankruptcy, information regarding the income of the non-filing spouse must be included in the filing spouse’s statements and schedules. Why, you ask? Because the income from the non-filing spouse given for the benefit of the filing spouse may mean the filing spouse has the means to pay some of the debt. The Bankruptcy Process You can start the bankruptcy process by filing a petition with the bankruptcy court serving your area. In addition to the petition, you must also file with the court (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a statement of financial affairs; and (4) a schedule of executory contracts and unexpired leases. In addition, you must provide the assigned trustee with a copy of the tax return or returns for the most recent year as well as tax returns filed during the case. These documents must be provided for both husband and wife. Creditors Meeting Between 21 and 40 days after the filing date, the trustee will call a meeting of your creditors. In the case of a joint petition, both husband and wife must attend the creditors’ meeting and answer questions regarding their financial status and property. Within ten days of this meeting, the trustee will communicate to the court whether the case should be presumed to be an abuse under the "means test". Benefits Of Joint Bankruptcy Filing There are benefits to filing jointly. You will save on filing fees, as the fee is the same for both as it is for one. Filing jointly will often give the couple a greater chance of keeping their property because of the “doubling” of exemption amounts; However, in Colorado the homestead exemption amount is not doubled with a total maximum at the time of writing of $75,000, or $105,000 if 60 or over or disabled. In addition, joint filing will save the married couple a lot of time. Determining whether to file together or separately, whether to file for chapter 7 or chapter 13 bankruptcy, and ensuring the protection of as much of your property as possible is a complex process. Each couple’s situation is different, so it is important that a married couple considering a joint or individual petition consult an experienced Bankruptcy Attorney. As a former trustee for the U.S. Bankruptcy Court, with over thirty years experience, Attorney Martin Long is an expert in the industry with decades of experience in Colorado . We also serve Aurora, Centennial, Highlands Ranch, Denver, Lakewood, Englewood, Littleton, Castle Rock, Colorado and the Denver metro area with three convenient locations. For help with your financial matter, call the Law Office of Long & Long for a free initial consultation at 303-832-2655 .
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