Your lender has been contacting you about missing mortgage payments. You recently received a notice that they’re going to start the foreclosure process. The lender is going to reclaim your house and sell it to someone else to pay off the value of the loan, understanding that you are not going to pay it back.
Naturally, you don’t want to lose your house. This is especially true if you have a family. Would declaring bankruptcy be a way to stop the foreclosure, give your family some more stability, and allow you to stay in the home?
A temporary solution
In some sense, bankruptcy can be a temporary solution to the issue that you’re facing. This is because it creates an automatic stay, putting all other cases on hold. Once you file for bankruptcy, your mortgage lender has to wait to proceed with the foreclosure until the bankruptcy case concludes. So if it takes you six months to get through the bankruptcy, the lender can only initiate the foreclosure after that point, giving you much longer in your home.
But it’s important to remember that this automatic stay is lifted once the bankruptcy case concludes, so you’ll need to take more steps if you want to keep your home long-term. It could be that the bankruptcy makes your debt more affordable, such as if you used Chapter 13 to put it into a repayment plan. This could allow you to get caught up on your mortgage. If you still have an income, but you just had overwhelming debt, bankruptcy may give you some more financial freedom so that you can concentrate on paying your mortgage and stopping your lender from foreclosing in the first place.
There are a few different types of bankruptcy to consider, depending on the specifics of your situation, so be sure you know exactly what legal options you have.