Effect on Foreclosure
Can Bankruptcy Stop a Foreclosure?
Yes, it can. When you file for bankruptcy an automatic stay is put in place, and all Creditor Actions must stop. Depending on which Chapter you choose (7 or 13), you have different methods of trying to keep the property that is being foreclosed upon.
If you file Chapter 7 during a foreclosure proceeding, the Common Pleas Court will suspend the action until the creditor is granted relief from the stay or the bankruptcy is discharged. If you are still interested in retaining your home you may be able to work out a loan modification with your lender. You also always have the option to cure the deficiency up until the date of the sale.
If you file Chapter 13 you may try to save your property by repaying the deficit amount over the next three to five years. Remember you will also be required to continue making your monthly mortgage payment as well. A Chapter 13 plan is a great way to help you meet your monthly payment obligations and allow you to retain assets such as your house that you were in danger of losing.