If you’re a homeowner, foreclosure is certainly something you’d rather not consider. It could mean losing your home as the lender forecloses and then re-sells it to someone else. You don’t get to recoup the money that you’ve been paying on that mortgage loan previously, so you’re starting completely over without a house.
If you find yourself facing this type of bleak outlook, you may want to consider bankruptcy. Perhaps you’ve heard that it can stop foreclosure from happening. Is this true or not?
It can create an automatic stay
Bankruptcy can be helpful in some ways. What it does is that it generates an automatic stay. This is an order that’s going to be issued by the bankruptcy court. It says that all other legal cases pending against you – of a financial nature, at least – have to stop until the case has been resolved. This would include your foreclosure proceedings. They cannot continue until the bankruptcy has been settled, which can take months.
However, this is not a permanent solution. The automatic stay does not last forever. Ideally, you can use it to buy yourself some time or reorganize your finances so that you can get current on your mortgage again. That’s how you stop the foreclosure from taking place. Bankruptcy can help because it gets rid of other debt and it does pause the process. However, don’t assume that just filing for bankruptcy means you can never lose your home. It’s just a tool to use.
As such, it’s important to look into all of the legal tools you have at your disposal. Take the time to consider them carefully with all potential real estate issues.