What happens to foreclosure if we file bankruptcy in Pennsylvania?

With bankruptcy in Pennsylvania, individuals who file a chapter 13 bankruptcy petition can immediately have the foreclosure process stopped. Chapter 13 comes with an automatic stay which starts as soon as the bankruptcy petition is filed. The stay, which remains in effect until the bankruptcy is discharged or dismissed, is what immediately stops all creditors’ debt recovery activities. This means that creditors such as mortgage lenders can’t continue to threaten or go through with the foreclosure action. In addition, if the foreclosure is actually granted, the automatic stay can still stop the process. In other words, the automatic stay can prohibit the lender from auctioning until the moment the property is auctioned.

Chapter 13 is a legal process which allows Pennsylvania residents to repay creditors through a repayment plan. The plan varies depending on people’s financial situation. However, the repayment plan typically last three to five years and pays back the missed mortgage payments. During that time, people make monthly payments to a bankruptcy trustee and continuously pay their mortgage payments. Once the payments are completed, the bankruptcy is successfully discharged.

It’s best for people interested saving their homes through chapter 13 should talk with a lawyer specializing in bankruptcy in Pennsylvania. The lawyer will explain the risks of missing payments and what could happen to an automatic stay. More importantly the bankruptcy lawyer will instruct you on what you need to do before your bankruptcy petition is filed such as complete pre-bankruptcy credit counseling.