Can I avoid foreclosure through bankruptcy?

If you’ve received a notice that your mortgage lender is initiating foreclosure proceedings, you’ll likely do anything to put the brakes on that process. Avoiding foreclosure is a major reason that people come to us to talk about bankruptcy — they’re looking for the solution to save their house.

Based on your situation, bankruptcy may or may not help you avoid foreclosure. In order to get the best outcome, it’s important to understand what protections are available against foreclosure.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy typically offers a full discharge of your outstanding debts without need for repayment. When you file for Chapter 7, you fall under the “automatic stay” provision, which mandates that all creditors stop collections actions until your case is discharged (complete.)

This automatic stay can delay a foreclosure, but may not allow you to completely avoid it. The mortgage lender can still request permission from the court to proceed with a bank sale. Whether or not such a request would be granted is hard to guess. However, filing Chapter 7 will allow you to avoid foreclosure for the next 60 days or so. During that time you might be able to sell your property or work with your lender to find a more palatable solution, so it can be a valuable reprieve.

Chapter 13 Bankruptcy

The other kind of bankruptcy is Chapter 13, which requires repayment of some portion of your outstanding debt. Chapter 13 can be a good choice for avoiding foreclosure. The process for Chapter 13 requires establishment of a payment plan with your creditors. In other words, you’re working with your creditors to find a more workable situation.

Many homeowners facing foreclosure find that the payments required to maintain the payment plan are burdensome. Some bankruptcy proceedings may allow for a loan modification on the mortgage, which could bring down the monthly payment cost. And Chapter 13 also offers the automatic stay protection, ensuring at the very least time to come to a positive solution.

To avoid foreclosure through bankruptcy, seek out an attorney NOW

If you’re facing foreclosure, there’s no time to lose. An in-depth discussion with an attorney will allow you to make educated decisions about bankruptcy as a tactic to postpone or avoid losing your home. Don’t make the mistake of waiting too long. Save money and time by seeking bankruptcy help from a reputable Ohio bankruptcy attorney today. Contact us for your free, confidential consultation today.