Will Filing a Chapter 13 Bankruptcy Stop a Foreclosure?

Most individuals regard filing for bankruptcy as the last hope for returning to a stable financial situation. While the term “bankruptcy” may seem daunting at first, filing is indeed a viable method of settling large amounts of debt.

Sometimes, one’s debt is so high that they face having their home foreclosed and sold at auction in order for creditors to recover as much money as possible. This is, of course, a worst-case scenario, but also a very real possibility for those who are not proactive in paying back their creditors.

If your home has recently been foreclosed, or you expect that it could be in the future due to your outstanding debts, consider filing for Chapter 13 Bankruptcy.

Doing so halts the foreclosure process and allows homeowners the time necessary to develop customized payment plans. 

“Automatic Stay” and How It Can Help

When a homeowner misses consecutive mortgage payments, they may face the possible foreclosure of their home. However, by filing for Chapter 13 Bankruptcy, a provision known as “automatic stay” goes into effect immediately.

This temporarily stops the foreclosure process and allows the homeowner to consider their options for settling their debt without persistent communication from creditors.

One should keep in mind, however, that “automatic stay” does not postpone the selling of your home indefinitely; rather, a homeowner should only utilize the provision to begin planning for a more permanent solution. 


Chapter 13 bankruptcy to stop foreclosure on your home


The Payment Plan

While the “automatic stay” provision is in effect, homeowners must follow through with all payments outlined in the payment plan that their creditor approved.

Essentially, the payment plan allows a homeowner the opportunity to catch up on their missed mortgage payments over a period of about five years, depending on their state and particular situation.

If their financial situation changes and they are, as a result, unable to continue making payments as agreed, they must alert their creditors as soon as possible.

At this point, they must either submit a new payment plan or file for Chapter 7 Bankruptcy and risk the liquidation of properties and assets until paying off the debt. 

Keeping Your Home and Lasting Effects

Once you have filed for Chapter 13 Bankruptcy and begun the process of repaying your debt over the course of a few years, you are well on your way to keeping your home and coming out of the situation debt-free.

From the moment you file, “automatic stay” keeps the creditors from selling your home at auction. But, you only can stop foreclosure only by making consistent payments. 

Once you have completely caught up on the overdue payments, you can finally breathe a sigh of relief, knowing that your home is no longer at risk of being sold. It is yours to keep.

Despite the positive effect of filing for bankruptcy, there are negative effects as well. The primary consequence of filing for Chapter 13 Bankruptcy is the effect that filing has on your credit score.

With a record of bankruptcy, it is likely that you will not qualify for certain loans and lines of credit.

However, when you are desperate to keep your home from foreclosure, filing bankruptcy is sometimes the only viable solution. Therefore, proceed with caution, and get advice from experienced lawyers. 

File Chapter 13 with A Lawyer

Regardless of what type of bankruptcy you are planning to file, consulting with a bankruptcy lawyer beforehand can help you better understand your legal options.

When you file for Bankruptcy Chapter 13 in particular, a lawyer can aid tremendously in negotiating payment plans that satisfy your financial situation and the interests of your creditor, so that you can continue owning your house until you, yourself, make the decision to sell in the future.  

Above all else, do not fall into despair upon hearing the word foreclosure. Instead, consult with a lawyer and determine your best options for proceeding.

File Confidently With A Bankruptcy Lawyer

While your financial situation may be overwhelming, the process of filing for Chapter 13 Bankruptcy doesn’t have to be.

To ensure that you are following all requirements and creating a manageable plan that satisfies your interests and those of your creditors, enlist the assistance of an experienced bankruptcy lawyer.

With their expertise, you can develop the best financial plan for minimizing your debt and resuming your life.

Learn More

At Blue Bee Bankruptcy, our lawyers are highly experienced in the various filing options.

More importantly, we understand that each case we receive is unique and each client has different needs and goals. We will discuss these signs with you and decide the best route to take.

We strive to help our clients rebuild their lives and take steps toward a better financial future through filing. 


Best Bankruptcy Attorneys in Salt Lake City

If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.

Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!

Contact Us Today For Help! You can schedule your free consultation online or call us at (801) 285-098.


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