When Homeowners File for Bankruptcy

 Posted on February 27, 2023 in Foreclosure

One of the primary lessons that Americans learned from the 2008 recession is that even hardworking people can fall on hard times no matter how financially responsible they are. As a result of this reality, you and your family may be facing a genuine risk of losing your home due to the foreclosure process. As a result, you may be thinking about filing for bankruptcy.

Depending on the details of your unique financial situation, filing for bankruptcy could help you to save your home, catch up on overdue payments, and restructure your debt to make your repayment obligations more manageable. With that said, filing for bankruptcy is not the best option for everyone, so you will want to carefully weigh your options before determining the best way forward.  

Taking Advantage of the Automatic Stay

If you choose to file for bankruptcy, you will benefit from the protections afforded by the automatic stay as soon as the court receives your paperwork. The automatic stay halts most collection actions and keeps creditors from harassing you for nonpayment until your case is either resolved in your favor or dismissed.

While the automatic stay is in place, you can negotiate a loan modification with your lender and/or catch up on missed payments. That way, by the time your case is resolved, your loan will be in good standing, and you will no longer be at risk of foreclosure.

Note that if you choose to file for Chapter 7 bankruptcy, the automatic stay will not remain in effect for long. Your case will resolve within a matter of months. So, if your financial situation is unlikely to improve soon to the extent that you will be able to make your mortgage payments regularly and on time, seeking Chapter 7 relief may not be your best option. However, restructuring your debt and making payments for three to five years via a Chapter 13 “reorganization” case might give you protection via the automatic stay for long enough to resolve your challenges effectively.

Contact a San Antonio Bankruptcy Lawyer

If you are hoping to save your home from an elevated risk of foreclosure, filing for bankruptcy may provide you with the opportunity you need to stabilize the situation at hand. The knowledgeable San Antonio, TX bankruptcy lawyers at Law Offices of Chance M. McGhee can discuss the unique ins and outs of your circumstances. 

Our experienced attorneys understand how challenging someone’s debt situation can prove to be. Do not spend another sleepless night trying to worry your way into a solution. Schedule your free consultation today by connecting with our team via our website or by calling us at 210-342-3400. We are here to help and we look forward to learning about your circumstances. 

Source:

https://www.usa.gov/foreclosure