Will filing for bankruptcy help to stop foreclosure of my home?

Foreclosure chapter 7 won’t help to stop the foreclosure of your home. However, chapter 13 bankruptcy will. Typically, chapter 7 is for unsecured debts such as credit card and medical bills. Even payday loans are considered unsecured debts because they are not backed by collateral. Therefore, the automatic stay that comes with the chapter 7 will only stop wage garnishments and lawsuits. Your home, on the other hand, is backed by collateral and is considered secured debt. Therefore, you need to file chapter 13. This bankruptcy chapter will stop the foreclosure because it comes with a stronger automatic stay. The stay not only immediately stops wage garnishment and lawsuits, it also stops the foreclosure process. This means that the lender can’t file or continue a foreclosure lawsuit. The lender can’t even continue with the foreclosure sale of your home.

Chapter 13 is more complicated than chapter 7. For instance, the bankruptcy chapter isn’t settled in approximately six months like chapter 7 is. Instead chapter 13 takes approximately 36 to 60 months to complete because you’re required to pay the mortgage company the amount you owe. The back payments are paid through the U.S. Bankruptcy Courts. However, you are still required to pay your mortgage payments to the lender each month.

To understand more about chapter 13 and saving your home, you should talk with a bankruptcy lawyer. The lawyer can review your finances and make sure you qualify for the bankruptcy chapter.