Filing a Chapter 7 or a Chapter 13 bankruptcy will both temporarily suspend any action by your lender regarding the foreclosure on your home. When you file for bankruptcy relief, you are protected by the Automatic Stay provisions of the U.S. Bankruptcy Code which prevents certain creditors from pursuing collection activity. A foreclosure is a collection activity. Therefore, your bank will not be able to move forward with the foreclosure until the Automatic Stay has expired or the creditor has obtained relief from the Automatic Stay through the Bankruptcy Court.
Can filing bankruptcy stop the bank from taking my home through foreclosure?
Filing a Chapter 7 or a Chapter 13 bankruptcy may help you save your home from foreclosure. First, the filing of the bankruptcy case will temporarily stop any foreclosure activity by your mortgage creditor as a result of the Automatic Stay provisions of the U.S. Bankruptcy Code. This temporary break could provide you with enough time to get caught up on your payments or negotiate with your bank. It may also provide you with the opportunity to get rid of a burdensome second mortgage if the value of your home has significantly decreased. In a Chapter 13 Bankruptcy, you can catch up on your late payments interest free over a 3 to 5 year time period.
This will allow you to come out of the bankruptcy current on your mortgage. Lastly, in a Chapter 7 and a Chapter 13 Bankruptcy filing, you may also ask the Bankruptcy Court to order mortgage mediation/reconciliation. This allows you to proceed with mortgage modification mediation with a mediator and under Bankruptcy Court supervision. This may help you reach a long term solution to stop the foreclosure and help you save your home.
Can filing bankruptcy stop my Second Mortgage company from foreclosing?
As explained above, a bankruptcy filing can temporarily stop a foreclosure and may be able to help you save your home. In the case of a second mortgage or home equity line of credit, there may be an additional option available to stop foreclosure and help you save your home.
Strip off a wholly unsecured second mortgage or home equity line of credit.
In the Middle District of Florida, a homeowner can use Chapter 7 or Chapter 13 to get rid of or “strip off” a wholly unsecured second mortgage or home equity line of credit. Whether this option will be available in your case is dependent on different facts and circumstances. Our affordable and experienced bankruptcy lawyers are available to discuss your case and will be able to advise you of whether this option is available in your case.
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