If I Go Into Foreclosure Do I Need To File For Bankruptcy

by Gibson Maseko

It can be very difficult to choose between settling for bankruptcy or allowing a foreclosure to take place. Few people realize how difficult the choice is to make, or recognize that the decision is not an either/or one. A mortgage lender will file a foreclosure action when it is not paid its monthly mortgage payments.

The only way to stop this is to pay the mortgage lender. Most people realize how important it is to make your car payments on time every month, if you do not want to have your car repossessed. Similarly, an individual may lose their home through foreclosure if they do not keep up with the monthly payments on their mortgage.

If a person’s debt is so bad that they cannot pay their debts, then they sometimes must file bankruptcy. This action stops all civil proceedings against the debtor while the debtor is in bankruptcy. As a result, the mortgage lender is incapable of immediately continuing their foreclosure, or any other legal action.

However, a mortgage lender can file for relief from the automatic stay, and when the relief is granted, simply proceed with the aforementioned action. The bottom line is that bankruptcy does not stop foreclosure and it does not allow a debtor to keep a house without paying the mortgage lender. While it cannot stop the action, bankruptcy can slow it down.

While bankruptcy does not stop foreclosure, it can give a person time to pay a mortgage lender or make it easier for a person to pay a mortgage lender. Bankruptcy makes a mortgage lender pause in their foreclosure efforts, and a debtor has a little extra time to raise the money. Since the act of filing bankruptcy can get rid of many unsecured debts completely, a person who is in debt may find themselves with more money that they can pay their mortgage payments with. In terms of a chapter 13 bankruptcy, the courts will dictate that the payment of the overdue mortgage needs to be paid through several payments, which will further give the debtor time to pay the lender off.

In order to file for bankruptcy, you must first qualify – which not everyone does – and even if you do, you will be faced with large legal fees. Legal costs and fees might actually end up being more than the amount needed to catch up on the past due mortgage payments. If you find yourself in a situation where you think bankruptcy can stop or stall foreclosure, you should discuss it with a lawyer. Bankruptcy is so detailed that you should not try to handle it by yourself. This article is only intended to give general information, so for more detailed information, contact a lawyer in your state.

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