If you are in real financial trouble, you may be looking into bankruptcy and foreclosure. If you have exhausted all your options of trying to avoid foreclosure with your lender, filing for bankruptcy may be the right solution for you. When you start missing your mortgage payments, you are in a period know as pre-foreclosure, this is the time you need to consider all your options and make some smart decisions quickly.
Usually if you are in Pre-Foreclosure you will have about 4 months until the bank completely forecloses on you. Use this time wisely and start looking into alternative options. If you have tried negotiating with your lender, a short sale or deed in lieu of foreclosure and none of these options have worked, it is time to look into bankruptcy.
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Filing for bankruptcy can possibly avoid or delay foreclosure on your home. For instance when you file for chapter 7 or chapter 13 bankruptcies, the court will issue you an "Automatic Stay." This is an order for relief, where you creditors must cease collections on you right away. If your home is scheduled for foreclosure sale, it must be postponed, while you await the bankruptcy proceedings.
Of course it would be great if it all works out this way, but of course there are exceptions to the automatic stay. A lender can obtain the courts permission to lift the stay, if this happens you may only have a couple months before the house will be sold.
The other exception is if the foreclosure notice has already been filed. The Automatic stay can't do much if you are past the pre-foreclosure stages and have already been foreclosed on. For instance if you have received a three month notice of default and then file for bankruptcy after two months have already passed, the three month would elapse after you'd been in bankruptcy for only one month. Therefore you will loose any time that you thought bankruptcy would buy you.
Chapter 13
Filing for chapter 13 bankruptcy can help you eliminate the payment on your second or third mortgage. If your first mortgage is secured by the entire value of your home, you may no longer have any equity to secure the later mortgages. This will allow chapter 13 to discharge the second and third mortgages and recognize them as unsecured debt. Which under Chapter 13 usually does not have to be paid back. You will want to hire a local bankruptcy attorney to make sure this gets done correctly.
Chapter 7
Filing for chapter 7 bankruptcy won't make your foreclosure go away, but it can buy you time. It can give you an extra two or three months, before your house can be sold on you. This time can be vital, for securing a new living situation and saving up money. Filing chapter 7, you can live in your home free while you waiting for your bankruptcy discharge. Chapter 7 can cancel your debt that is secured by your home; including the mortgage, as well second mortgage and home equity loans.
In conclusion, if you're running into some financial hardship, don't ignore your problems and wait for the last minute to do anything. If your facing foreclosure, bankruptcy is something that can help buy you time, but don't just file with out a back up plan. You have to have some sort of idea on what your going do after filing for bankruptcy and what steps you can take to have more secure future.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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