You are worried that your house is going to go into foreclosure. You are well aware that you have missed at least one mortgage payment. The lender has been asking for payment, and you know that they could start the foreclosure proceedings if you repeatedly miss paying your mortgage.
When you voice these concerns to a friend or a coworker, they tell you to file for bankruptcy. They claim that this will stop the foreclosure. They point out that you are missing those mortgage payments simply because you have too much outstanding debt to afford everything. Bankruptcy makes logical sense, and they say that it can save your house. But is this true?
An automatic stay can make it possible to regroup
Bankruptcy can be a short-term solution to buy you more time in your home.
When you file, the court issues an automatic stay. This means that creditors cannot collect money that is due and that other financial actions against you are essentially put on pause. The court wants the bankruptcy case to be addressed first, so your lender cannot foreclose on your home until that happens. Since bankruptcy can take a few months, you get to stay in your home longer.
But that does not mean it is a permanent solution. Once the bankruptcy has concluded, then the court is going to lift the automatic stay. If you are still not current on your mortgage, your lender can once again begin foreclosure proceedings.
Of course, if bankruptcy eliminates some of your other debts, then your house may become affordable again. This is why it is so important to understand all of the legal options you have when facing issues like overwhelming debt or foreclosure on a home. To ensure you understand the intricacies of the law, it can help to work with an experienced attorney.
