As increasing numbers of people in Milwaukee and beyond are facing foreclosure due to a poor economy, lost jobs or decreased income from divorces, some look to personal bankruptcy to save their homes. While filing for bankruptcy could delay the foreclosure process, it may not to be able to save someone’s home. Additionally, the delay that filing for bankruptcy provides in the foreclosure proceedings generally ends up being only about two months’ time, experts say.
When someone files for bankruptcy, banks can request a relief from stay, which removes a home from bankruptcy protection. Many lenders will file these motions within a week or two of receiving notice of the bankruptcy filing, says a bankruptcy adviser. Unless someone can prove that they are current on their payments, the relief from stay is granted.
This is not to say that filing for bankruptcy cannot help people keep their homes. If people are able to achieve debt relief and become current with their mortgage payments, they will be able to stop foreclosure proceedings. Additionally, people may be able to work with banks during the bankruptcy process to arrange loan modifications.
Bankruptcy laws vary between states, so an experienced attorney could help protect one’s assets and understand what is involved in filing. While bankruptcy could allow people to start fresh and escape from massive amounts of debt, it is important that they understand what it can and cannot do for them. Additionally, an attorney may be able to help someone determine if Chapter 7 or Chapter 13 bankruptcy is best based on their specific circumstances.
Source: Fox Business, “Will Bankruptcy Save my Home from Foreclosure?” Justin Harelik, Jan. 15, 2013
