Many factors can make it difficult to stay up-to-date with your mortgage payments. Unexpected medical bills, job loss, emergency expenses, and other situations can make you fall behind on your mortgage. Sometimes when this happens, it’s difficult to regain financial footing, making the threat of foreclosure a very real possibility. If this is the case with you, it’s important to know what steps you can take to prevent foreclosure and keep your family in your home. Fortunately, a Dayton bankruptcy lawyer is equipped to help you protect your greatest asset.
Automatic Stay and the Foreclosure Process
Filing for bankruptcy with the help of a bankruptcy lawyer immediately initiates “automatic stay.” This protection helps homeowners deal with a pending foreclosure by preventing creditors from collecting debts or enforcing liens through wage garnishment or other means. Both a Chapter 7 or Chapter 13 bankruptcy filing will initiate automatic stay protection. Not sure which option is best for you? A bankruptcy lawyer can help.
Automatic stay can help you with the foreclosure process by:
- Providing additional time. In a Chapter 7 bankruptcy, your assets suddenly become part of the bankruptcy estate and are liquidated to pay back creditors. The stay gives you time to arrange other housing or figure out a way to get back on track with your mortgage.
- Giving you excess proceeds. If the house is eventually sold and the house sells for profit, you are entitled to the excess proceeds once your creditors have been paid in full.
- Fresh start. Chapter 13 allows you to restructure your debts, thereby giving you a window of time to avoid foreclosure and repay debts on your home mortgage.
While bankruptcy can help prevent or delay a foreclosure with automatic stay, it’s possible for creditors to terminate the protection of automatic stay. This is why it’s so crucial to work with a bankruptcy lawyer during this process. Once the creditor files the motion, you are entitled to a response. Working with a bankruptcy lawyer helps navigate any unexpected situation.