You’re not necessarily surprised that your lender is trying to foreclose on your home. You know that you’ve missed mortgage payments. Maybe you’ve been struggling with other types of debt or job loss, for example. Maybe you’ve had medical challenges and are missing time from work as a result. These are some of the major reasons why people miss their payments, even when they fully intend to pay their debts on time.
That said, you still certainly do not want to lose your home and you’re interested in tactics to try to stop a foreclosure from happening. Someone mentions to you that you should just declare bankruptcy because that forces a foreclosure case to end. You may never have considered bankruptcy before, but it certainly seems like an attractive way to eliminate some of your debt and keep your home. Is it that simple?
Initiating an automatic stay
Bankruptcy can be useful in this scenario because it initiates an automatic stay, which is applied to other financial cases. Your foreclosure case will almost certainly be paused for the duration of your bankruptcy case. For this reason, many people declare bankruptcy just to buy themselves some time. Say that you spend the next six months going through the bankruptcy process. The foreclosure cannot proceed during that time, so you’ll give you and your family another six months to figure out a solution or a new living situation.
But it may be even better than that. You may be able to eliminate other debts as you are resolving your foreclosure challenges. This could free up money that you can then use to get current on your mortgage again. As long as you’re current, your lender isn’t going to want to foreclose on the home. So, a bankruptcy filing won’t necessarily stop a foreclosure instantly, but it can give you an avenue to do just that.
That said, this process can be complicated. It’s important for you to know exactly what legal steps to take to work toward the results that you are seeking. Seeking legal guidance can help you to better understand your rights in re: foreclosure and bankruptcy so that you can make truly informed decisions about your situation.