05 May Bankruptcy: Stopping a Foreclosure.
The filing of any bankruptcy creates an automatic stay. That stops all legal processes against the debtor including foreclosures.
The question, of course, is: how long is the foreclosure stopped. In a Chapter 7 bankruptcy, the foreclosure is stopped until the creditor gets the judge in the bankruptcy to lift the automatic stay or until the bankrupt receives a discharge. Unfortunately, if the debtor isn’t making his payments, getting the judge to lift the stay to proceed with a foreclosure is pretty automatic.
In a Chapter 13 bankruptcy, so long as the debtor is making the ongoing mortgage payments, and contributing something each month towards the arrearage that created the foreclosure in the first place, the process will stop altogether. Generally, in a Chapter 13 plan, the debtor will pay back all of the arrearage and emerge from the plan only owing the regular payments to the mortgage company.
Of course, if the debtor can’t make the payments under the Chapter 13 plan, the creditor or trustee will dismiss the plan, and the foreclosure will continue as before. The process of a foreclosure varies from state to state, so contacting a good bankruptcy attorney in your area is essential.
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