10 Mar Bankruptcy Will Stop A Foreclosure–No Doubt About It!
A bankruptcy filing will stop a foreclosure proceeding. As soon as you file for bankruptcy protection, a court order called the automatic stay, goes into effect immediately. With the number of foreclosures climbing to record levels, clients facing foreclosure will often ask whether a bankruptcy filing will really stop a foreclosure. Really, it will!
The automatic stay is one of the most important aspects of a bankruptcy filing. The automatic stay not only prohibits the creditor from pursuing the foreclosure action (or any legal action for that matter), it also prohibits the state court hearing the foreclosure case from taking any further action. In fact, the automatic stay stops other federal courts from taking any action on a case affected by a bankruptcy filing. Even if a foreclosure proceeding has already been filed, you can still stop it with a bankruptcy filing.
Of course, as we all learned in English class, there are exceptions to the general rule. That certainly is true in bankruptcy cases. If you had a prior chapter 13 case dismissed within one year of your current filing, then the automatic stay will expire thirty (30) days after you file for bankruptcy unless you file a motion to extend the automatic stay prior to its expiration setting forth sufficient reasons why the automatic stay should be continued.
Another major exception is if you had two or more cases dismissed within a year of your current bankruptcy filing, then the automatic stay does not come into effect at all. If you had two or more prior cases dismissed, then upon filing bankruptcy (actually within thirty days), you must file a motion to impose the automatic stay setting forth good reasons and that the case was filed in good faith.
If you have not filed bankruptcy before or at least not had a case dismissed within one year and you are facing foreclosure, a bankruptcy filing will stop the foreclosure. This may provide you with sufficient time to attempt to reorganize your finances so that you can try to save your home.
Adrian Lapas, Esq.
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