Bankruptcy lawyers can often help stall, stop and even eliminate foreclosure. When you declare Chapter 7 or Chapter 13 Bankruptcy, the court automatically issues a stay. That automatic stay means that for the moment creditors cannot pursue their efforts to collect the debt you owe or take possession of the property in lieu of the debt.

First of all, you should realize that foreclosure on a home does not happen overnight. Houses are not like motor vehicles, which can be repossessed by a repo company that simply tows the vehicle away. For most people, a home is the most expensive item they will ever purchase. In my bankruptcy practice, I’ve never seen a home foreclosure happen quickly.

Foreclosure efforts usually won’t be initiated until you fall anywhere from two to four months behind. Bankruptcy is one way that you can slow down and sometimes entirely stop a mortgage company or bank from foreclosing. Let’s consider a few ways that in my practice as a Sacramento bankruptcy lawyer I’ve found I can help people.

As I mentioned, when you petition for bankruptcy, the court, through an automatic stay, will inform all creditors that they must cease collection efforts. Bankruptcy takes from three to four months and thus the stay gives you some breathing space.

However, there are two occasions when stays have not run the entire three to four month period. The lender may file a motion to lift the stay, which means you may not be allowed the entire length of time. Still, after filing you’ll still have at least two months.

Also, if the lender has already filed the foreclosure notice, then the stay will not stop the advance notice regarding the sale of the home. In California, a lender must ensure the homeowner receives at least three months notice prior to foreclosure. That means that when it comes to selling your home, it’s helpful to file your petition prior to the foreclosure process.

With Chapter 13 Bankruptcy, you’ll be allowed to make payment arrangements over the course of three to five years that will stop foreclosure on a first mortgage as long as you adhere to the payment play as outlined in your bankruptcy payment schedule. Additionally, Chapter 13 can help eliminate second and third mortgages. This will happen if the total value of your home is secured by the first mortgage. The second and third mortgages would be considered unsecured debt and the court may then determine that you do not have to pay off them off.

As a bankruptcy lawyer, I’ve found that Chapter 7, although offering protection and is less complicated than Chapter 13, it can help but may not stop foreclosure. I will address Chapter 7 in a separate blog where I can get into more detail.

If you have any questions regarding Chapter 7 or Chapter 13 Bankruptcy please contact our office at info@california-bankruptcyattorney.com or at 888-589-1977 for a free consultation.