How Can Bankruptcy Stop a Foreclosure?

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.