Can Bankruptcy Stop Foreclosure on My Home?

If you are facing foreclosure on your home in 2021, you aren’t alone. The economic downturn of 2020 has led many homeowners to get behind on their mortgage payments. You now may be considering your options, hoping for a way to avoid foreclosure. Seeking bankruptcy is one option you should consider.

Avoiding home foreclosure through bankruptcy

A Chapter 7 bankruptcy likely only will delay your home foreclosure. However, you can save your home from foreclosure with a Chapter 13 bankruptcy. Chapter 13 bankruptcy is the best option for those who have fallen behind on their mortgage payments because of a temporary financial setback. In a Chapter 13 bankruptcy, you restructure your debts. You can pay back your delinquent mortgage payments over three to five years. You also must be able to keep up with your current mortgage payments.

With a Chapter 13 bankruptcy, you even can save your home from foreclosure if your lender has demanded you pay your full loan now or a court has ordered a foreclosure. Once you file bankruptcy, you get an automatic stay from creditors trying to collect your past debts.

You also can sell your home in Chapter 13 bankruptcy if you can no longer afford the mortgage payments. By selling your home, you can keep your home’s equity and pay your mortgage lender and other creditors from those funds.

Chapter 13 bankruptcy comes with another benefit: It only remains on your credit report for seven years. A Chapter 7 bankruptcy remains on a credit report for 10 years.

Getting bankruptcy help

If you are considering filing bankruptcy to avoid foreclosure on your home, you should consult an experienced bankruptcy attorney. An attorney can review your financial situation to see if Chapter 13 bankruptcy is a good option for you.

You may have a lot of emotional attachment to your home. You may be able to avoid foreclosing on it and give yourself some stability by seeking bankruptcy protection.