When you get the foreclosure notice from your bank, you are not necessarily surprised. After all, this does not happen right away. You have likely missed multiple mortgage payments, so you knew the lender would take action.
That said, you are still interested in saving your home. You have just run into some unexpected financial troubles. You believe you can get through them. Could it stop the foreclosure if you decide to declare bankruptcy, clear your debt and get a fresh start?
The automatic stay
When you file for bankruptcy, one thing that the court does is issue an automatic stay. If other financial judgments or cases are pending against you—including a foreclosure—they can’t proceed. The bankruptcy has to be resolved first, and then these other issues can be addressed. So, filing for bankruptcy may buy you a few more months, during which you can stay in your house, but your lender can’t actually foreclose.
That said, this is only a temporary solution. Once the bankruptcy has concluded, you do have to get current on your payments or you could still lose the house. This may be possible, however, if you have eliminated other debts or reorganized your debt into a repayment plan—as you can do with Chapter 13 bankruptcy—but it is important to budget and make sure that you make all payments moving forward. Bankruptcy is not a permanent solution that will keep you in your home forever.
These types of financial cases can grow very complex, so take the time to look into all of the legal options at your disposal.
