Can Chapter 7 Bankruptcy Stop Foreclosure?
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One of the biggest reasons people file bankruptcy is that they are unable to pay their mortgage due to losing a job, medical issues, or other financial problems. If you are facing foreclosure you might be wondering if filing will stop the foreclosure proceedings and save your home.
Chapter 7 bankruptcy is liquidation where your non-exempt assets are sold to pay off your creditors. Any debts that are left are forgiven in the bankruptcy discharge and you get a fresh start. Ch 7 cannot help you makeup back payments on your mortgage however. When you file Ch 7 the automatic stay will go into affect and stop any foreclosure proceedings that are currently underway. This will give you time to negotiate with your mortgage lender to refinance your loan in order to save your home from foreclosure. If your lender is unwilling to negotiate unfortunately, you will lose the home if you cannot make up the overdue payments.
If you do what to save your home you should consider chapter 13 bankruptcy as missed mortgage payments can be included in the repayment plan. If the bankruptcy trustee approves the plan, your home will no longer be in foreclosure and you don’t have to come up with the missed payments all at once, they will be paid off over the next 2-5 years.
