Using Bankruptcy to Stop a Foreclosure
If you're about to have your property foreclosed on, bankruptcy could be the answer. You can stop foreclosure through the use of a bankruptcy lawyer, though you should consider all your options, and you should think about the consequences.
Using Bankruptcy to Stop Foreclosure
Declaring bankruptcy stops collection proceedings. When bankruptcy starts, foreclosure stops. We recently filed a Chapter 13 case that had the time stamp of 2:33 and 21 seconds PM to stop a foreclosure scheduled for 3 PM. The automatic stay went into place immediately and the foreclosure did not proceed - we prefer more notice than that, so contact us well before you are facing imminent foreclosure proceedings.
But the foreclosure isn't entirely halted, it's just paused. You can stop foreclosure proceedings, but you need to have a plan afterward.
If you declare Chapter 13 bankruptcy, you may be able to restructure your debts to make your property more affordable. If you declare Chapter 7 bankruptcy, you may be able to erase enough of your extraneous debts to keep your home. But much of this has to do with whether your home's affordability works out. If you can't afford your home, it's likely that you will need to continue the foreclosure or sell the property, if you are to recover financially.
Still, bankruptcy can give you enough breathing room to figure out the future of your financial situation, and to determine realistically whether you are able to keep your home. Because a certain amount of home value is covered under bankruptcy exemptions, you don't automatically lose your primary residence (or your primary vehicle). There's room to figure out how to keep your most important assets, with the right planning.
The Pros and Cons of Using Bankruptcy
Bankruptcy is a serious financial choice and shouldn't be taken lightly. But if you're already in the situation of approaching foreclosure, bankruptcy is frequently the best option. You do need to think about whether you'll be able to keep your home with or without bankruptcy, and you should consider strongly whether Chapter 7 or Chapter 13 is best.
Can You File Bankruptcy for the Sole Purpose of Stopping a Foreclosure?
If the question is can you, then yes, you can file a bankruptcy and the automatic stay will stop a foreclosure. If the question is should you, then no, you probably should not. Once a bankruptcy is filed you have volunteered to be under the laws and rules of the court. Since filing a bankruptcy solely to stop a foreclosure can be seen as "bad faith", you can end up hurting yourself, and potentially having a bar imposed against you to prohibit refiling in the future.
Bankruptcy can help you if you're experiencing financial issues. But how it can be used depends on your own unique situation. To learn more, contact us at Heston & Heston Law.