How Are Bankruptcy and Foreclosure Related?
Needing to file for bankruptcy is evidence of a financial bind. Sometimes a debtor is struggling enough that they may also be behind on their home mortgage payments. Once they reach a certain amount of missing payments, typically three months’ worth or more, they become in danger of foreclosure.
At Groce & DeArmon, we have seen plenty of cases of bankruptcy and foreclosure. And if you are someone having to consider both bankruptcy and foreclosure at the same time, we sympathize with you. When times are hard, you need a law firm capable of taking control of the situation, providing you with the counsel and knowledge you need to make the best decisions for yourself and your family.
Here, we at Groce & DeArmon discuss some of the ways in which bankruptcy and foreclosure affect one another. The proceedings differ depending on whether you intend to file for Chapter 7 bankruptcy or Chapter 13, and it is important to understand the different ways those interact.
Chapter 7 Bankruptcy and Foreclosure
If you are in danger of foreclosure (meaning that the foreclosure notice has not yet been filed) and you are considering filing for Chapter 7 bankruptcy, you may be surprised to learn that you can actually delay foreclosure by filing. You see, once you have filed for bankruptcy, the court issues an “order of relief.” This order effectively halts all of the collection efforts of your creditors in what is called the “automatic stay.” It is possible for your creditors to request that this stay be lifted, however. Even if it is, the foreclosure and subsequent sale of your home should still be delayed by a couple months. If the stay is not lifted, you can expect your home to remain in your possession for a couple months longer.
Chapter 13 Bankruptcy and Foreclosure
Chapter 13 Bankruptcy and foreclosure actually function a bit differently together. While filing will still lead to the issuing of an order of relief and the automatic stay, you can also arrange to pay off your late mortgage payments as part of the repayment plan you set up. These late payments are referred to as the “arrearage,” and so long as you are able to make payments on them while keeping up your current payments, you can actually keep your home. This gives homeowners who cannot fathom the idea of losing their home to foreclosure a way out.
Groce & DeArmon Can You
Are you facing bankruptcy and foreclosure? Do you need the help of a trained and skilled bankruptcy attorney with over 13 years of experience helping the southwest Missouri area? Don’t hesitate to set up a free consultation with Groce & DeArmon today. We are here to help you. Reach us toll-free at 1-800-640-3706 to get started.