If you’re in danger of losing your home to foreclosure, you have already missed multiple mortgage payments. Most lenders will not start the proceedings as soon as you miss a single payment, so it takes a few missed payments in a row to trigger this.
If you’re looking for ways to save your home, you may quickly realize that the problem is the other debt that you have. You simply can’t afford to pay off everything else that you owe and pay off the mortgage at the same time. Filing for bankruptcy may help in two key ways.
Setting up an automatic stay
First and foremost, an automatic stay is used when you file for bankruptcy. This means your foreclosure case has to be put on hold. It doesn’t mean the lender can’t foreclose, but they simply can’t move forward with the process until the bankruptcy case is done. This can buy you time, and you may even get a few more months in your home simply because of the automatic stay.
Eliminating your other debt
Next, bankruptcy can help to eliminate the other debt that you have. Chapter 7 bankruptcy may get rid of it entirely, while Chapter 13 bankruptcy may put it into a repayment plan. Either way, the benefit to you is that you may now have the financial means to get caught back up on your mortgage. Your lender would prefer to have you get caught up than to foreclose on your home, so they may work with you to find a solution where you get to keep the house.
If you are starting the bankruptcy process, make sure you know exactly how it works, along with the potential benefits it provides.