The threat of foreclosure can be an incredibly unnerving experience. Despite your best efforts, you have been unable to keep up with your mortgage payments, which has led to the stress of phone calls, notices, and threats that you will lose your home. And to make matters worse, mortgage lenders are not forgiving and will not always show you the flexibility you need in modifying your mortgage.
Besides attempting to modify a loan or work with the lender to avoid foreclosure, it is also advisable to speak with an attorney about answering the lawsuit and raising a foreclosure defense. You are entitled to due process of law, and some defenses that have been successfully raised include lender fraud, the lender’s lack of the original note, servicing abuse by the lender, and “truth in lending” law violations.
Unfortunately, if your debt is continuing to spiral out of control or you are facing imminent foreclosure actions–such as a sheriff’s sale, then it is advisable to simultaneously understand how bankruptcy may help you when it comes to foreclosure.
Bankruptcy and Foreclosure
Chapter 7 and Chapter 13 bankruptcy both offer relief to people who are overwhelmed by debt. Often, debt struggles go hand in hand with an inability to keep up with mortgage payments. When experiencing debt problems and a risk of foreclosure, bankruptcy can help to delay or avoid foreclosure proceedings.
One of the great benefits of filing for bankruptcy is the automatic stay that comes with it. This temporary injunction creates immediate relief by halting collection actions by creditors. This means that harassing calls and letters, as well as repossession efforts, and pending lawsuits must cease while the stay is in effect. Significantly, the automatic stay also immediately stops foreclosure action.