Absolutely. Filing for bankruptcy is one of the most sought after methods of stopping foreclosure. When you file for bankruptcy, an automatic stay order from the court stops every creditor’s collection activities. Foreclosure is affected as it’s an attempt by your lender to gain their money back. Once your lender is aware that you filed for bankruptcy, they must suspend the foreclosure process on your home. Provided a foreclosure sale has not been concluded before you filed for bankruptcy, you can always use bankruptcy to stop foreclosure. Here are some of the benefits of stopping foreclosure using bankruptcy:
You are given a period of relief ranging from three months to five years, depending on the type of chapter you filed. The relief can be that your mortgage payment will be suspended for a set period. It could be that your mortgage duration will be extended. Filing for bankruptcy will make it easier for you to get out of financial hardship.
When it comes to the effect filing for bankruptcy might have on your credit score, it is nothing compared with the damage a foreclosure can cause. A foreclosure will make it impossible for you to secure another loan anytime soon; however, filing for bankruptcy will help you get your finances under control.
If you did not take action early, many lenders would be unwilling to negotiate a loan modification with you. Depending on the chapter of bankruptcy you filed, you will be able to negotiate a loan modification with your lender easily.
Filing for bankruptcy also helps struggling homeowners get rid of unsecured debts. You will be relieved from such debt and only have non-dischargeable debts to pay off.
Contact your lawyer to discuss your situation and which chapter of bankruptcy will be best for you.