There’s no worse feeling than receiving a foreclosure notice from your lender. You’ll immediately assume that you’ll lose your home to repossession in the future. Even though this is possible, you’re not in this position just yet.
There are many steps you can take to delay or stop foreclosure, with bankruptcy as one of the best.
The automatic stay
Once you file for foreclosure, the court issues an Order for Relief. This results in an automatic stay, which tells your creditors to cease all collection activity for the time being. So, even if your lender has scheduled a foreclosure sale, it will be postponed until your bankruptcy case comes to an end.
Chapter 7 and Chapter 13 are different
Chapter 7 and Chapter 13 bankruptcy differ in many ways, including the impact on foreclosure.
For example, with Chapter 13 bankruptcy, you can use a repayment plan to pay off missed payments.
Conversely, Chapter 7 cancels all the debt secured by your property, including both mortgages and home equity lines of credits and loans.
Your lender has the power to file a motion to lift the automatic stay. If they’re successful in doing so, they’re able to proceed with the foreclosure sale before your bankruptcy comes to a conclusion.
Filing for bankruptcy is one of the best ways to delay foreclosure; however, it’s a big decision that will impact your personal and financial lives in a variety of ways.
If you’re interested in filing for bankruptcy to stop foreclosure, learn more about Chapter 7 and Chapter 13. This will put you in position to make the right choice and to protect your legal rights.