Can Bankruptcy Stop Foreclosure?

Bankruptcy can stop foreclosure, but there are also other alternatives to consider before committing to a bankruptcy. It is important to weigh the pro's and con's of bankruptcy alongside the other options available to you. First, let's take a look at the benefits and fall backs of both Ch. 7 and Ch. 13 bankruptcy to stop foreclosure.

If you do not know the difference between a Chapter 7 and Chapter 13 bankruptcy, you will want to research their differences thoroughly to know which one to pursue, but the main difference is that a Chapter 7 bankruptcy absolves you of all unsecured credit card debt, while through a Chapter 13, the courts will structure a repayment plan to your creditors.

A Chapter 13 bankruptcy was designed to stop the foreclosure process so that you could enter into an affordable repayment plan with your creditors and your mortgage company. When you file for bankruptcy, your property debt will be entered into the court system and there will be a "stay of foreclosure". This means that while the court/judge structures your repayment plan to your creditors, your property will be safe from sale. This does not mean that you automatically do not have to make a mortgage payment. Usually this results in maintaining mortgage payments, while your arrears are "re-capitalized", or placed back on top of the principal loan balance.

Through the Chapter 13 bankruptcy, your unsecured (credit card/medical) debt will be restructured and you will have the repay your creditors over a period of 3-5 years depending on the outcome of the financial evaluation from the court. Your mortgage, however, will remain unchanged and you must continue to fulfill your original obligations under the terms when the mortgage was originated.

Can bankruptcy stop foreclosure? Yes, but there are other options available to you.
Remember, a bankruptcy will not change the terms of your loan!

You can also stop foreclosure with a loan modification. A mortgage loan modification will stop foreclosure and result in modified terms of your mortgage. Your credit rating/FICO score will also be far less impacted and does not result in a massive blemish on your credit report. A bankruptcy will remain on your credit report for 7 years. A bankruptcy is also public information.

Through a loan modification, you can save your home from foreclosure, modify the terms of your mortgage to affordable levels (not available through bankruptcy), save your credit, and your public reputation.

Before pursuing bankruptcy, find out if you qualify for a loan modification, absolutely free of charge. We provide a complete financial review for free; Find out if you qualify for a loan modification, before committing to a bankruptcy. We will help you determine if a loan modification is right to stop your foreclosure, or if bankruptcy can stop foreclosure.

Free Loan Modification Evaluation