Can bankruptcy protect you from foreclosure?

Filing bankruptcy stops the foreclosure process (see California Foreclosure information below). The bankruptcy automatic stay stops a pending foreclosure sale on your house (so long as you haven’t had a prior bankruptcy case dismissed within the past 12 months). It also stops any collection action on any debt.

What happens if you file bankruptcy before or after a foreclosure?

If you file for bankruptcy before foreclosure, your mortgage debt will be discharged. (Although the lien will remain, which means that if you default on payments, the lender can still foreclose.) Because there is no longer any mortgage debt, after the foreclosure sale there will be no deficiency…

What happens when you file a Chapter 7 bankruptcy?

When you file bankruptcy, an “automatic stay” goes into effect. The stay acts as an injunction, or bar, against any attempts by creditors to collect debts or enforce liens, including taking any action related to a pending foreclosure. (Learn more in Bankruptcy’s Automatic Stay and Foreclosure .)

Can you still live in your house if you file bankruptcy?

You can live in your home without making any mortgage payments during the bankruptcy—at least until the lender obtains relief from the stay and completes the foreclosure. Or the lender might forgo this right and simply wait for the bankruptcy case to conclude before continuing with the foreclosure.

Why do people file for Chapter 13 foreclosure?

Many families simply do not have the means to comply. In order to stop foreclosure, they file for Chapter 13 because it allows for them to pay back the past-due mortgage balance over the life of the Chapter 13 plan.

What happens when you file for bankruptcy and foreclosure?

If your lender had scheduled your home for a foreclosure sale, and you file for Chapter 7 bankruptcy, the sale will be legally postponed while the bankruptcy is pending—typically three to four months. However, the lender can ask the bankruptcy court for permission to proceed with the sale by filing a “motion to lift the automatic stay.”.

Can a bankruptcy court lift a foreclosure automatic stay?

A lender can file a motion asking the bankruptcy court to lift the automatic stay (terminate it) and allow it to proceed with foreclosure. You are entitled to file a response, and if you oppose the motion, the bankruptcy court will hold a hearing before it rules on whether or not to lift the stay.

Can a mortgage company foreclose if you file Chapter 13 bankruptcy?

For the Chapter 13 restructuring process to be effective, you must have enough income to keep up with current mortgage installments and make payments on arrearages that accrued before you filed bankruptcy. Once the court approves a Chapter 13 repayment plan that provides for repayment of mortgage arrears, the lender cannot foreclose.

Can a Chapter 7 bankruptcy stop a foreclosure auction?

Can a Chapter 7 Bankruptcy Stop a Foreclosure? Yes. A Chapter 7 bankruptcy can stop a foreclosure process temporarily. Do you also want to know how to stop a foreclosure auction immediately? File a Chapter 7 bankruptcy.