Bankruptcy
Bankruptcy cannot prevent foreclosure, but it can delay it, giving homeowners time to liquidate debt and save money.
This information is intended as an educational tool only. It is not a substitute for the advice of a competent legal counsel or financial expert. We do not provide legal advice, so please consult with an attorney before making any decisions.
Once a homeowner files a bankruptcy, the court can enter a stay, which ceases all collection actions, sales and foreclosure. Before proceeding with a foreclosure, the lender must file a motion to lift the stay. This buys the homeowner time to get current on mortgage payments or sell through a short sale.
Types of Bankruptcy
- Chapter 7: Liquidation to completely settle personal debts.
- Chapter 13: Wage earner reorganization plan with payments made toward paying off debt in 3 to 5 years.
- Chapter 11: Business reorganization to settle business debts.
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