Foreclosure does not happen right away. If you miss a single mortgage payment, your lender is not going to foreclose. It usually takes numerous missed payments, along with multiple notifications from your lender.
Once this starts happening, though, you may feel like it is inevitable that you are going to lose your house. You simply can’t make the monthly mortgage payments because you have too much other debt. Perhaps your income was recently reduced, so now your budget just does not work.
You may have heard that filing for bankruptcy is a potential solution. It will put a stop to the foreclosure case, thereby helping you keep your home. Is this true?
Bankruptcy creates an automatic stay
This is true in the short term. When you file your bankruptcy case, the court issues an automatic stay. This puts all other financial cases against you on hold. Lenders cannot try to collect until the bankruptcy has concluded. That includes your mortgage lender, so they can’t foreclose on your property.
But — it doesn’t work forever. Once the bankruptcy case is finished, the automatic stay is lifted and the foreclosure can proceed again. As such, you want to focus on how bankruptcy can help you eliminate other types of debt. If you have those debts waived with Chapter 7 bankruptcy, or if you pay them off with a repayment plan under Chapter 13, then you may be able to get current on your mortgage again.
If you’re considering filing for bankruptcy or facing foreclosure, you can see how important it is to know exactly what legal options you have.