Although bankruptcy is sometimes seen negatively, if you're facing foreclosure, it could be one way to stop that process and to save your home. It's a fact that many people in America fall behind on their mortgage payments. There was the recession, and now people are finally trying to get caught up.
For those who were unable to work out modifications or a short sale, a foreclosure may be looming. Fortunately, that process takes time, which means you have time to find a solution to your problem. That solution may be bankruptcy.
The foreclosure process doesn't typically start until 60 to 90 days after you miss your mortgage payments. That gives you time to think about alternatives to foreclosure, like bankruptcy or a deed in lieu of foreclosure. Why would you want to choose bankruptcy over the other options?
The first reason is because it provides an automatic stay. That means that the bank must stop all collection attempts, no matter what the collection attempt is for. The foreclosure process is halted, and it may not be resumed until your bankruptcy ends. That gives you time to get the money you need to save your home.
Lenders do have the right to seek a motion to lift the stay, but you should still have around two months of extra time thanks to applying for bankruptcy. If the court does not agree to lift the stay, then you can work out a way to save your home during the bankruptcy process. Foreclosures and bankruptcies can seem complicated, but your attorney can help. There are ways to save your home.
Source: FindLaw, "Facing Foreclosure? How Bankruptcy Can Help," accessed July 13, 2017