For many troubled homeowners, filing bankruptcy proves the most effective tool for saving their home from foreclosure. If you are at risk of losing your home, a qualified Washington DC bankruptcy attorney can help you explore all options for dealing with a looming foreclosure and assist you in deciding whether bankruptcy is the best choice for you and your family.
Filing Bankruptcy Can Halt a Foreclosure Sale
Filing bankruptcy triggers what is known as an automatic stay, which bars creditors from taking collection actions such as repossession, garnishment and foreclosure. In most cases, the stay automatically remains in effect for the duration of a bankruptcy case. However, if one or more prior bankruptcy cases were pending within the previous year, the stay may be limited to 30 days or not go into effect at all. In those situations, a debtor can file a motion to extend or impose the stay. So long as you file your case and trigger the automatic stay before the foreclosure auction happens − even on the morning of the sale − the mortgage company cannot proceed. While the bankruptcy stay is in effect, your mortgage lender can only conduct a foreclosure sale after obtaining court permission.
An experienced Maryland bankruptcy attorney can help you file motions to extend or impose a stay and protect your rights if your mortgage lender files a motion to lift the stay.
How Chapter 7 Can Help
If your mortgage company seems willing to work with you on negotiating a forbearance or loan modification agreement or completing a short sale, filing Chapter 7 bankruptcy may be a viable option, especially if you have credit card, medical or other unsecured debts you want to discharge. In most cases, filing Chapter 7 triggers an automatic stay that halts the foreclosure and gives you approximately three months to negotiate with your lender while the case is pending. Additionally, you may be able to discharge any deficiency balance remaining after a short sale through the Chapter 7. To determine if you are eligible for Chapter 7 bankruptcy and how it might help you, contact a knowledgeable Washington DC bankruptcy lawyer today.
How Chapter 13 Can Help
Sometimes Chapter 7 is not an option. Perhaps you don’t meet the filing requirements for a Chapter 7, or maybe your mortgage company is completely unwilling to work with you, leaving you to somehow catch up the missed payments. As with Chapter 7, you can use Chapter 13 bankruptcy to halt a foreclosure by triggering the automatic stay. However, whereas a Chapter 7 gives you about three months to deal with your mortgage situation, a Chapter 13 gives you three to five years. In Chapter 13 bankruptcy, you enter into a three to five year repayment plan, through which you can catch up missed mortgage payments. Successfully completing a Chapter 13 plan allows you to exit bankruptcy current on your mortgage.
To determine if filing bankruptcy is your best option for dealing with a pending foreclosure, and for help deciding which chapter of bankruptcy would most benefit you, contact a dedicated Maryland bankruptcy lawyer today.