Will Bankruptcy Stop Foreclosure?

Last updated on: June 1, 2022

When facing a foreclosure, with the clock ticking, homeowners in default often consider drastic measures to save their home. In some cases, they may feel that bankruptcy is their only option. For those of you considering this devastating financial action, these are the very basics regarding personal bankruptcy and foreclosures.

Related: How Will the Closing of the Rocket Docket Era Affect Florida Foreclosure Cases?

Will Chapter 7 Stop Foreclosure?

Chapter 7 allows individual debtors to dispose of many of their debts, with some specific exceptions. This action may help homeowners who are struggling with overwhelming debt, but remain current on their mortgage. This way they can get out from under credit card debt, installment loans and the like, leaving them with the finances to keep their home.

But if you have already defaulted on your loan, Chapter 7 is not the solution you’re seeking to stop the foreclosure and keep your home. It will initiate a temporary halt to the proceedings, but ultimately, you will still be responsible for the defaulted loan amount.

Will Chapter 11 Stop Foreclosure?

Chapter 11 is a bankruptcy option tailored to business owners and some individual debtors. This type of bankruptcy allows you to reorganize your debt, rather than discharge or wipe it out. Because of the nature of a Chapter 11 bankruptcy, this is not advisable for homeowners looking to stop a foreclosure action.

Related: Foreclosure Stripping

Will Chapter 13 Stop Foreclosure?

This type of bankruptcy action provides debt reorganization and repayment options for the debtor. You will need to establish a repayment plan spanning a three to five-year period. This allows you to retain most of your property.

Though Chapter 13 bankruptcy offers some beneficial features towards keeping your home, you will need to adhere to some strict guidelines. It’s essential that you continue paying your mortgage during the bankruptcy process to ensure that the foreclosure action doesn’t continue.

You will also need to make good on the back-mortgage amounts that put you on the path to foreclosure. These mortgage arrears must be paid off by the end of your court-approved repayment period. While this option may be optimal for those homeowners with the financial ability to get back on track quickly, it might not work for those clients who fell behind on mortgage payments due to some overwhelming financial setback.

Related: Who Is A Mortgage Loan Servicer?

Keep in mind that bankruptcy is typically not the best way to defend your home from foreclosure. Bankruptcy prevents you from getting future loans and having salvageable credit for many years to come.  At Charlip Law Group LC, we offer legal foreclosure avoidance services to avoid bankruptcy, from aggressive and tactical state and federal foreclosure defense strategies, including short sale negotiation or loan modification. If you are in danger of a Florida foreclosure action on your home, don’t delay in contacting the Charlip Law Group Miami Foreclosure Defense Attorneys to explore your available options.

Fill out the contact form to be contacted or call us 24/7 at (305) 354-9313 to schedule an appointment.  If you have been served, time is of the essence.  Call right now to schedule an appointment and protect your home.

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