If a homeowner files for bankruptcy, can they stay in their property and avoid foreclosure?

Filing for bankruptcy might not be one of the things you would have foreseen doing as a homeowner, but this just might be the last resort option that could help you avoid foreclosure. This option can also allow you to continue staying in your house, keeping you from being homeless as you work on your personal financial recovery.

The ideal time to file for bankruptcy is when you are already at least three months behind on your mortgage payments, and other options such as refinancing or working out a new payment plan with your lender have failed. By this time, your lender would have started the foreclosure process and sent you a notification.

When you file for bankruptcy, you’ll be granted an automatic stay which directs your lenders to stop collection activity, as well as postponing of a foreclosure sale of your home, which allows you to remain in your home. While the lender can have this stay lifted, the process of doing so will take months.

women entrepreneurIt must be noted that this option of filing for bankruptcy to stop the foreclosure process only works in some and not all cases. As mentioned, creditors can file a motion to lift the automatic stay. Avoiding foreclosure and being able to still reside at your home may not happen as well if you have filed for bankruptcy too late. Lastly, the type of bankruptcy you file also matters.

Chapter 7

If you file for Chapter 7 bankruptcy, the lien on your home will not be cancelled and foreclosure on your property will not be prevented. This is because in Chapter 7 bankruptcy, the understanding is that you don’t have the financial means to pay your bills and you will be surrendering your home as collateral to pay off your financial obligations.

Chapter 13

If you wish to use filing for bankruptcy as a last ditch effort to prevent foreclosure and keep your home, file under Chapter 13 bankruptcy. You can then use the automatic stay period to restructure your obligation to your lender which will likely include paying off accumulated interest and late payment fees, as well as a new loan agreement with a new repayment period.

However, this solution only works in cases where the homeowner who has been behind in his mortgage payments still has a steady source of income indicating the capability of meeting the new monthly payments and paying them on time.

Thus, while filing for bankruptcy can indeed provide the possibility of avoiding foreclosure and eviction, you must weigh your options and capacity to stick to a new loan agreement carefully before you start the process.

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Estefania Castaneda
Estefania Castaneda
17:24 04 Sep 21
Extremely pleasant, attentive to all my needs always. It was a pleasure renting an apartment from Ken.
Vichai Soysouvanh
Vichai Soysouvanh
14:17 03 Sep 21
Can't say enough about Ken and his team. This was the most seamless sale I made. I didn't have to deal with all the... nonsense that comes with selling your home. They bought my house as is, I didn't have to declutter and pay a broker commission. All in all great experience, will do business again.read more
Niki Keser
Niki Keser
17:46 06 Aug 21
I had a wonderful experience renting one of their properties for 7 months. The apartment was beautifully remodeled and... Ken and his team were always responsive to any needs. I would recommend to anyone looking to sell or rent.read more
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YASMINA VASQUEZ
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Alfredo Garcia
Alfredo Garcia
03:20 17 Jun 21
Selling my property too Ken was the best thing I did. Although I was skeptical at first I soon found out how... professional he was. Even though my closing contract was not standard because of the pendemic situation. He followed through on time with all the contract terms as promised. Thank you Ken for your professionalism.Alfredo Gread more
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Vishrut Patel
23:27 19 May 21
Ken was referred to us by someone who had sold their home thru Ken last year. From the first meeting to the last... transaction, Ken and his team were professional, efficient, easy to work with, and above all.... caring. Each seller's situation is different, and Ken truly understands that. We were treated with respect each time.Since we were in a time crunch situation, selling our home with a cash offer from Ken was the best decision we could have made. We were perfectly okay with getting slightly less money for our home as compared to selling it via an agent. But if you consider the money saved on agent commissions (both buyers and sellers), closing costs, repair costs, attorney fees, and most important of all... time and headache, you can't beat the option to sell your home with a guaranteed cash offer from a reputable buyer like Ken.My wife and I were very pleased with our experience with Ken. If you are in the market to sell your home fast for a cash offer, I highly recommend giving Ken a call!Best of luck!Vishread more
Christopher Martino
Christopher Martino
14:19 10 Mar 21
Ken and his team were great. They were easy to work with, professional, and responsive. If you are thinking of selling... your home they offer a super easy process.read more
Chelsea Grant
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I am a travel nurse and stayed in a town home for 3 months... It was exactly as described and any issue that came about... was handled within a few hours - I would definitely recommend and I would definitely stay again!read more
Aaron Zachko
Aaron Zachko
12:41 14 Aug 20
Amazing experience! Ken was upfront, quick and got the deal done in no time. Having done a number of real estate... transactions this was by far the easiest and smoothest. I would unconditionally recommend him to anyone looking for an easy, quick and fair transaction.read more
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Joseph Tricarico
19:10 26 Mar 20
Ken is a very professional individual from start to finish. As promised, he gave me a fair deal on my one of my... properties that was in rough shape. He was knowledgeable and responsive to my requests and as promised we didn't need to waste time with inspections and appraisals and we closed quickly. He made it painless as possible by having his crew handle the clean up. This was truly a quick and easy process but a professional individual. Thanks Ken!read more
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