If you’re facing mounting debt and struggling to pay your bills, the last thing you want to worry about is losing your house. But while it may not sound like the most attractive option, bankruptcy can offer valuable relief. Below, we discuss how bankruptcy can help you delay foreclosure or strategically manage the process so that you can buy yourself some time. To learn more, talk to a Memphis foreclosure defense attorney at The Sweeney Law Firm, P.C. today.
Can Bankruptcy Stop Foreclosure?
Bankruptcy can temporarily halt the foreclosure process. Immediately after filing, the court will put a hold on all legal actions against you through the automatic stay. The automatic stay freezes collector efforts, including foreclosure actions.
You will have the opportunity to determine whether you should keep your house or surrender it to the bank. Many people who file bankruptcy are able to keep their homes, while others decide that selling it and paying creditors is right for them. Still others decide to give their homes back to the bank. A Memphis bankruptcy attorney can help you weigh your options.
How Chapter 7 Bankruptcy Can Help
Chapter 7 bankruptcy wipes out your unsecured debts, like credit card debts and medical bills. But under Chapter 7, you may be forced to sell some or all of your property in order to repay your creditors. This often includes your home. You will have to determine whether you can afford to keep your home in the long run and whether the creditor will allow you to establish a more manageable payment plan going forward.
The good news is that Chapter 7 allows you to potentially keep a foreclosure off your credit report. However, the bankruptcy may weigh heavily on your score anyway. Additionally, if your creditor had already begun the foreclosure process, it will have to start over after the bankruptcy process is complete. But Chapter 7 gives you time to potentially negotiate with the lender and plan your next steps. Speaking to a foreclosure defense attorney is crucial to devising a strategy that best suits your situation.
How Chapter 13 Bankruptcy Can Help
If you have been unable to pay your mortgage for months, Chapter 13 may be a solution for you. Chapter 13 allows you to roll all or most of your debts (including a mortgage) into one manageable payment plan that will last for three to five years. A foreclosure defense attorney can help you get on a repayment plan with your creditor that may allow you to keep your house. You will be able to make low monthly payments that include arrearage amounts to pay back anything that is overdue.
Can a Lender Foreclose on Me Even If I File for Bankruptcy?
A lender may submit a motion to lift the automatic stay, which would allow them to continue with the foreclosure process. If the lender files a motion to lift the automatic stay, they are asking the bankruptcy court permission to continue with the foreclosure and ultimate sale of the home. And if the motion is granted, you may be forced to move out of the house within a few months.
If your lender had already given you a foreclosure notice before you filed for bankruptcy, then the automatic stay may not stop the foreclosure. This advance notice gives you a short period of time to move out of the house, and the automatic stay does not pause or stop it.
Call a Memphis Foreclosure Defense Attorney Today
Facing foreclosure can be embarrassing and stressful. Find relief today by speaking to a Memphis TN foreclosure defense attorney at The Sweeney Law Firm, P.C.