Can bankruptcy protect my home from foreclosure?

Can bankruptcy protect my home from foreclosure?

On Behalf of | Dec 29, 2020 | Uncategorized |

The thought of losing one’s home to foreclosure is scary, especially when a family is not sure where they will live after the process settles.

Still, for too many Floridians, job losses or other financial emergencies can mean choices between paying the mortgage and keeping food on the table and the lights on.

The end result is that hardworking people in the Tampa area could still be seriously delinquent in their house payments and dealing with a bank that just will not negotiate.

Bankruptcy can at least buy a family some time to recover financially

Some types of personal bankruptcy are more helpful than others when it comes to protecting one’s home from foreclosure.

However, all types of bankruptcy, including a Chapter 7, can offer some relief, at least on a temporary basis, to a family that is trying to fight a foreclosure.

In most cases, a Tampa resident who files for Chapter 7 relief will get the benefit of what the law calls an automatic stay.

The automatic stay will legally require a bank to stop the foreclosure process where it stands and cancel any pending sale of the home. The stay lasts until the bankruptcy concludes or the bank gets permission to continue with the foreclosure.

Some additional time may be just what a family needs to re-arrange their finances and come up with a way to work out an arrangement with the bank. At a minimum, it can be an opportunity for a family to find some suitable housing.

Chapter 7 bankruptcy also provides some ongoing assistance

To be clear, though, Chapter 7 bankruptcy does not, standing alone, stop a bank from selling a foreclosed home.

A Chapter 7 may still be helpful since it will prevent the bank from taking any other legal steps beyond selling the home. In other words, a family can walk away from the home without fearing garnishment, further court hearings or actions against their bank accounts.

Also, since Chapter 7 does discharge debts like credit cards and medical bills, it may give a family the financial wiggle room to work out a loan modification with their bank.