You have already received multiple notices that you are missing mortgage payments. You know that the next step is likely for your lender to foreclose on the home. If you miss too many payments in a row, the lender will eventually foreclose, remove you from the property and then sell that house to a third party to recoup as much as they can of the money from your initial loan.
When mentioning your predicament to a friend, they tell you that all you need to do is file for Chapter 7 bankruptcy. They claim that this will stop the foreclosure. But is it actually that easy?
An automatic stay
The situation is a bit more nuanced than your friend has let on. It is possible to pause a foreclosure by filing for bankruptcy, as this creates an automatic stay. Once the court issues an automatic stay, any other collection efforts, including a foreclosure, have to pause until the bankruptcy case has been finalized.
But the most important thing to remember about an automatic stay is that it is just a temporary measure. So this is not a way to prevent foreclosure entirely. It is just a way to buy yourself a few months before the bankruptcy is concluded, the stay is lifted, and the foreclosure can continue.
Of course, with careful planning, you may be able to protect your home. Maybe you also have extreme amounts of medical debt, for example, which is why you could not afford the mortgage. But if bankruptcy eliminates your medical debt, it may be possible for you to then get current on those missed mortgage payments.
This is just one example of how bankruptcy can be helpful in the face of foreclosure, so be sure you know exactly what options you have and how to navigate the bankruptcy process.
