Can Chapter 7 bankruptcy save my home from foreclosure?
When a bankruptcy case is filed, with few exceptions an “automatic stay” goes into effect. The stay prevents creditors, including mortgage lenders, from taking any action to collect a debt. If a foreclosure is pending, it must be stopped. If you file a Chapter 7 bankruptcy, however, the foreclosure may only be stopped temporarily. The lender will likely file a motion for relief from the stay. Such motions are routinely granted by the Courts. This will allow the lender to start the foreclosure process again.
Usually, the better alternative to deal with a mortgage arrearage is Chapter 13. Chapter 13 allows an individual or couple with regular income to deal with their debts by making regular payments to a Chapter 13 Trustee over a period of 3 to 5 years. The plan can cure an arrearage on a home mortgage over a 60 month term, and deal with other short-term debts such as credit cards, car loans, and medical bills. This can free up funds so that future mortgage payments can be made in a timely manner.
In addition, in many jurisdictions a Chapter 13 plan can “strip off” a second or third mortgage on property, if the property value is less than the amount owed on the first mortgage. Once the lien is stripped off, the 2nd mortgage can often be paid little or nothing through the plan, and the remaining balance completely discharged at the conclusion of the plan. (Lien strips are also available in Chapter 7 cases in many jurisdictions, but stripping off a junior lien still does not solve the problem of an arrearage on the first mortgage.)
Another huge advantage of Chapter 13 is that your attorney fees can be included in the plan, so that the case can be filed without a big upfront expense.
Deciding whether to file a bankruptcy case, and if so what chapter to file under, can be complicated. It is critical to get good advice from a qualified and experienced bankruptcy attorney before making your decision.
Other Frequently Asked Questions:
- Are my student loans dischargeable in bankruptcy?
- Can a Chapter 7 bankruptcy save my home from foreclosure?
- Can bankruptcy help my credit score?
- Can bankruptcy help with my income tax obligation?
- Can bankruptcy protect my workers compensation settlement funds?
- Can I discharge my old tax debt in bankruptcy?
- Can I file for social security disability while I’m still working?
- Can I receive workers compensation benefits if I was injured before or after clocking out?
- Can my re-enlistment bonus be discharged in bankruptcy?
- Can the bankruptcy trustee in my case seize the funds in my bank account?
- Chapter 13 Basics
- Chapter 7 Basics
- Get help filing your income tax returns for free!
- How can I stop debt collectors from harassing me and my family?
- How do I decide if bankruptcy is necessary?
- How do I know if bankruptcy is the right choice for me?
- How does the foreclosure process work in Georgia?
- How long does a bankruptcy case take?
- How long must I live in this area before I can file bankruptcy here?
- I cosigned a debt for a friend and now he won't pay. What can I do?
- I was fired after being hurt on the job. Can I still file for workers compensation?
- I was injured at work. Can I sue my employer?
- I was terminated from my job after a work injury. Now my condition has worsened. What are my options?
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- My car has been repossessed. Can bankruptcy help me get it back?
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- My doctor released me to light duty, but my employer is insisting I do more strenuous work. What should I do?
- My ex assumed our joint debts as part of our divorce settlement. Now he's filed bankruptcy. What can I do?
- My house is being foreclosed – What can I do?
- My workers comp doctor has released me to light duty work. Can my employer cut off my weekly benefits?
- My workers compensation doctor says I can return to work, but I can’t do the job. What can I do?
- Ripped off by a debt settlement company?
- Social security benefits — Can a creditor garnish my bank account and seize my social security funds?
- The trustee has filed a motion to dismiss my Chapter 13 case. What are my options?
- What can I do to improve my credit score?
- What to expect: First credit counseling course
- What to expect: free bankruptcy consultation
- What to expect: Second credit counseling course
- What to expect: Your next appointment
- When is my bankruptcy case closed by the court? Is it possible to reopen the case?
- Where would my bankruptcy case be filed, and where would the hearings be held?
- Will I have to sell my primary home, rental property or vacation home if I file for bankruptcy?
- Will paying off an old debt raise my credit score?
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Morgan & Morgan attorneys can help settle your debts such as credit card debt, auto loans and mortgage debt. Contact us if you need assistance with baknruptcy or have any questions about the process. No problem is too big or too small for us to help.