Stopping Foreclosure with Bankruptcy
Bankruptcy Will Stop Your Sale - At Least For Now For $395, you
can stop your sale- at least that is what the ads say. You are
about to find out how bankruptcy can be good or very damaging.
Bankruptcy will stop your foreclosure sale. It's a fact.
However, filing bankruptcy for the sole purpose of stopping
foreclosure is not what bankruptcy is for. And anyone that does
this to avoid foreclosure is in violation of bankruptcy laws.
Here is some basic information on bankruptcy.
What Is Bankruptcy?
There are two types of bankruptcy, Chapter 7 and Chapter 13.
Filing for a Chapter 7 bankruptcy means you are asking the
courts to completely discharge your debts. Filing for a Chapter
13 bankruptcy is when you set up a court- approved plan to repay
your debts.
Now, the two types of bankruptcy:
1.Chapter 13: Chapter 13 bankruptcy is a repayment plan that
will restructure your arrearage. More than 95% of all Ch. 13
bankruptcies filed fail. When you file the Ch. 13, this will
postpone your foreclosure sale until the meeting of creditors
also known as a 341 meeting. This usually takes place 60-90 days
after you file. Also, when you file a Ch. 13, you are paying for
2 attorneys, your attorney to file and another to take payments
and disperse the money to the creditors. At the meeting, you
will have to face your creditors. Many times this can be very
intimidating. The bank will ask for their money or for the judge
to give them a relief of stay. The relief of stay is asking for
the foreclosure to continue. If granted the attorney will
re-start the foreclosure process over with a set foreclosure
sale date around 30-45 days later. IF you do not have some money
for reinstatement for the Mortgage Company or bank, the judge
will likely grant the relief of stay. As you can see, bankruptcy
will stop your sale, but it is only temporary. Now, you have to
deal with the foreclosure process all over again plus now your
credit is in worse shape than before because you now have a
filed bankruptcy that is showing up on your credit file.
2.Chapter 7