If you’re potentially facing foreclosure, you may be searching for different solutions. You would ideally like to get caught up on your mortgage and be able to keep your home. You just don’t know if it’s possible.
One potential option is to file for bankruptcy. When you do this, it puts an automatic stay on your foreclosure case. This does not end the case entirely. But it does pause that case, as the court has to wait for the bankruptcy to be finished before the foreclosure can proceed.
What are the advantages?
The first advantage of doing this is that it can buy you some time. Bankruptcy usually takes a few months, so you don’t have to go through the foreclosure as quickly. This can give you peace of mind, especially if you have a family and you’re simply trying to stay in the same home.
The second advantage is that filing for bankruptcy can really change your financial situation. After all, it is intended to provide a fresh start.
If you use Chapter 7, for instance, you might be able to eliminate some of your major debt and create a post-bankruptcy budget that works on your current income. Ideally, this will free up enough money that you can get current on your mortgage payments once again. If you do this, your lender is likely to call off the foreclosure because they would rather that you pay the amount that is owed instead of taking the home and selling it to a third party.
As you can see, it’s definitely worth considering all of your options if you’re facing foreclosure. You also need to know which type of bankruptcy you may or may not qualify for.