Most times if you’re in pre-foreclosure, the bank will allow you about four months to actually foreclose on your property. Use this time wisely and embark on searching into alternative options. If you have tried negotiating with your lender, a short sale or deed in lieu of foreclosure and none of these options have worked, it is time to look into bankruptcy.
Filing for bankruptcy can possibly avoid or stop foreclosure on your house. For Example when you file for chapter 7 or chapter 13 bankruptcies, the court will issue you an “Automatic Stay.” This is an order for relief, where you creditors must cease collections on you right away. If your home is scheduled for foreclosure sale, it must be set back, while you await the bankruptcy proceedings.
Filing for chapter 13 bankruptcy can help you do away with the payment on your 2nd or 3rd mortgage. If your first mortgage is secured by the entire value of your home, you may no longer have any equity to secure the later mortgages. This will allow chapter 13 bankruptcy to drop the second and third mortgages and recognize them as unsecured debt. Which under Chapter 13 usually does not have to be paid back. You will want to hire a local bankruptcy attorney to make sure this gets done right.
When you file for Chapter 7 bankruptcy, this won’t make your foreclosure disappear, but it can buy you time. It can give you an extra two or three months, before your house can be sold on you. This time can be critical, for guaranteeing a new living situation and saving up money. Chapter 7 can delete your debt that is secured by your home; including the mortgage, as well second mortgage and home equity loans.
Lastly, if you’re running into some financial problems, don’t neglect your problems and wait for the last minute to do anything. If your facing foreclosure, bankruptcy is something that can help buy you some extra time. Take this bankruptcy advice on foreclosure seriously for it can one day help you get out of the situation!
