If you are facing foreclosure, it is a time of uncertainty. Foreclosure does not happen overnight, so you may still have months in your home before the lender reclaims it. But you know that things are going to be changing, and you may be looking into any options you have to keep your house.
One step you may want to consider is filing for bankruptcy. Initially, this will give you longer in your home because it puts an automatic stay on other collection efforts. Your lender cannot start the foreclosure process until the bankruptcy case has been resolved. If foreclosure is already underway, that case has to be put on hold. Only after the bankruptcy is done will the court lift the automatic stay.
Doesn’t this just delay losing your house?
Potentially. It is possible that the foreclosure could still happen after the automatic stay has been lifted. Bankruptcy does not guarantee that you get to keep your home.
But it can be a useful step to take. Often, people who are facing a foreclosure have overwhelming debt on many fronts, and that is why they have been missing those mortgage payments.
But if you use bankruptcy to eliminate things like credit card debt, medical bills and other expenses, what will that mean for your monthly budget? Some homeowners find that it frees up enough of their income that they can get current on their mortgage payments again. If you can do so, your lender would likely prefer that you just get caught up on your payments, rather than foreclosing on your house.
Financial options
You can see how there are many interrelated financial options and how complex the legal process can be. It is important that you understand your rights and how to proceed as you seek a financial solution.
