Like others in Nashville who are struggling with debt, you may be in danger of losing your home. Depending on your circumstances, however, filing for bankruptcy may stop a foreclosure. At Rothschild & Ausbrooks, PLLC, people often ask us how they can keep their homes and regain control of their finances. In order to help you understand your options, we will discuss how Chapter 7 bankruptcy filings impact foreclosure proceedings.
While filing for Chapter 7 bankruptcy alone will not permanently stop a foreclosure, it may provide some help. Upon filing your petition, the court will generally issue an automatic stay. By law, these court orders prevent your creditors from pursuing collection actions during your bankruptcy. Essentially, this delays the foreclosure. Therefore, you may be able to catch up on your mortgage arrears while you are saving money by not having to pay on certain other debts. It is important to understand, however, that your mortgage lender may ask the court to lift the stay prior to the resolution of your case. This would allow the lender to proceed with the foreclosure process.
Unlike Chapter 13 bankruptcy filings, there is no method for you to catch up on your past due mortgage payments through a Chapter 7 bankruptcy. Therefore, if you are not able to get current on your mortgage, and continue to make your regularly scheduled payments, your home could remain in jeopardy. Some companies may be willing to work with you, and others who are struggling with financial challenges, to come up with a repayment plan or modify your loan. You should keep in mind, however, that they are not required by law to do so. Furthermore, they generally cannot be compelled by the court to work with you.
For more information about saving your home and Chapter 7 bankruptcy, please visit our avoiding foreclosure page.