Can Filing For Bankruptcy Stop A Foreclosure Sale?
An upcoming foreclosure sale on your home does not necessarily mean you have run out of options to save it. If you are planning on filing for Chapter 7 bankruptcy, now is the time to do so. The bankruptcy could possibly save your home. In addition to filing for bankruptcy, there are two more options that could help you keep your home.
Why Does a Chapter 7 Bankruptcy Filing Save Your Home?
When you file for a Chapter 7 bankruptcy, the court will automatically issue a stay on all actions by your lenders. This means that your lender cannot sale your home until the court says so.
Do not rely on the stay to save your home forever though. It is only temporary and can be lifted at the discretion of the court. Your lender can even go to court and ask a judge to lift the stay so that it can go through with the foreclosure sale.
If you have no interest in keeping your home, you can use the space allowed by the stay to pack up your home and find somewhere else to live. If you want to keep your home though, you need to take action as soon as the stay is in place.
Can a Loan Modification Help?
One of the ways you can save your home while the stay is in place is to talk to your lender about a loan modification. A loan modification would change the terms of your original loan agreement. You could end up with a lower monthly payment or interest rates.
Your lender could even cut down on the total amount that you owe on the home. The lender will usually put the overdue balance in the new agreement so you will no longer be behind on your payments.
How Can a Chapter 13 Filing Help?
Another option you have is to convert your Chapter 7 filing to a Chapter 13. Chapter 13 filings set up a repayment plan for your debtors that spans up to five years. A bankruptcy trustee and your attorney will review your finances and determine what you can pay towards your debts.
All of your debts will be consolidated to one payment. As a result, you will not have to worry about making your mortgage payments on time. As long as you are making the one payment a month to the trustee, your mortgage is being covered.
The best way to save your home from an upcoming foreclosure sale is to talk to your bankruptcy attorney. He or she can help you explore your options and help you take action.