Bankruptcy - Usually a Temporary Stop to Foreclosure
One of the most frightening aspects of financial distress is the possibility of losing your home.
Even if the bank has started foreclosure proceedings, you can stop the process by filing for bankruptcy. But you should act quickly. You have a little more than 110 days from the beginning of the foreclosure process until your home will be sold at auction.
The two main steps to keep in mind are:
Notice of default process: The notice of default is recorded at the county recorder's office in the county where the property is located and gives official notice that the loan is in default. The borrower has 90 days from when the notice is recorded to make the loan current by paying all late charges and overdue mortgage payments.
Notice of trustee sale: If the loan is not made current within 90 days of the notice of default, a notice of trustee sale will be published. This is a 20-day notice that your house is about to be sold at foreclosure sale. Whether you have missed a few mortgage payments or the bank has already started foreclosure proceedings, please contact me to explore what options you have available to you.
Filing a Chapter 7 Bankruptcy will put an “automatic stay” on all your creditors. In other words, all creditors are immediately prevented from pursuing collections actions against you. However, a stay on foreclosure will not be permanent. The automatic stay only relieves you from unsecured debt, and prevents certain creditors to pursue collection. Secured creditors, like your lenders, are able to file for relief from the Court to be able to proceed with foreclosure. The only exception to this is filing a Chapter 13 Bankruptcy; with Chapter 13, you are given the opportunity to sit down with your creditors and create a payment plan, including with your lender. Once in agreement, you will have stopped foreclosure on your home, so long as you continue paying the agreed payments to your lender.
The fear of losing your home is overwhelming. However, Bankruptcy may be the right option to avoid foreclosure, and, to help buy yourself more time to save your home.
Disclaimer: The Law Office of Dina M. Sokhn has prepared this website and the contents contained therein solely for informational purposes. The contents of this website are not to be considered legal advice. Neither this website, nor access to or receipt of the information therefrom, is intended to create or constitute a lawyer/client relationship. This website is not intended as a substitute for legal counsel, and no one should act upon any information contained in this website without seeking legal counsel.