If you’ve fallen behind on your monthly mortgage payments and want to prevent foreclosure of your Salt Lake City home, filing for bankruptcy is an option. But, going this route isn’t a quick fix.
Bankruptcy is a complex legal process that results in long-lasting consequences, and filing a claim may mean agreeing to a multi-year debt repayment plan. However, if you’ve already tried other measures to prevent foreclosure – such as forbearance, loan modification or arranging for a short sale – bankruptcy might just be the best strategy for saving your home.
If you’re thinking about filing for bankruptcy in order to prevent foreclosure, you should discuss your situation with an experienced Salt Lake City foreclosure defense attorney. But the following guide from the Law Office of Davis & Jones, P.C., may provide you with some helpful information.
Bankruptcy’s Automatic Stay Delays Home Foreclosure
When you file a Chapter 7 or Chapter 13 bankruptcy claim in Utah, a court order called the automatic stay takes effect. This offers protection from foreclosure, as the order directs most of your creditors – including your mortgage lender – to immediately stop all collection actions.
If your lender has already scheduled your Salt Lake City home for a foreclosure sale, the automatic stay will put those plans on hold, at least while your bankruptcy is pending. Keep in mind, though, that your mortgage lender can bring a motion to lift the stay at any point. If successful, they’ll be able to proceed with the foreclosure process.
Filing for Chapter 7 or Chapter 13 can work to stall a foreclosure sale, but the effects of the two types of bankruptcy differ. An experienced Salt Lake City foreclosure defense attorney can assess your unique situation and help you determine an appropriate solution.
How Chapter 7 Bankruptcy Can Help With Home Foreclosure
Filing for Chapter 7 bankruptcy can buy you the time you need to negotiate with your mortgage lender, enabling you to prevent foreclosure. But if your efforts at finding a mutually agreeable solution fail, you may not be able to stay in your home after your bankruptcy case ends.
Chapter 7 is also known as a liquidation bankruptcy, and with this type of claim, all of your eligible assets will be sold in order to pay off your debts. In all likelihood, your home will be included in the sale, so you’ll only temporarily prevent foreclosure – but given that the process can take a few months, you should have time to make other living arrangements.
With Chapter 7 bankruptcy, you can wipe out your mortgage debt along with any other debt secured by your property. But if you want don’t want your lender to foreclose on your home, filing for Chapter 13 bankruptcy may be in your best interests.
Prevent Foreclosure by Filing for Chapter 13 Bankruptcy
While Chapter 7 bankruptcy involves selling off your assets to settle your debts, that isn’t how Chapter 13 works. File this type of claim, and you can prevent foreclosure by committing to a repayment plan.
With a Chapter 13 bankruptcy, you can catch up on your missed mortgage payments and repay other debts over time, typically three to five years. To prevent foreclosure during this period, however, you’ll need to adhere to your established mortgage schedule, making your regular monthly payments. Miss any, and your lender can petition the court to proceed with the foreclosure.
In addition, Chapter 13 bankruptcy may provide you with a way to deal with multiple mortgage loans. If you don’t have enough equity to secure a second or third mortgage, an experienced Salt Lake City foreclosure defense attorney may be able to use lien stripping to help you keep your home.
Talk to a Salt Lake City Foreclosure Defense Attorney Today
Is filing for bankruptcy the right way to prevent foreclosure? The answer to that question depends upon your individual circumstances, and you’d be wise to consider all of your legal options.
A qualified foreclosure defense attorney can provide you with the information you need to protect your interests. There’s no denying that bankruptcy will have a long-term impact on your financial future, but so will home foreclosure. With advice from an experienced legal professional, you’ll be able to figure out the best way to resolve your mortgage situation.
If you truly want to stop a bank foreclosure on your Salt Lake City home – or if you simply want to understand what it takes to prevent foreclosure – the Law Office of Davis & Jones, P.C., is here to help. Our professional team, led by attorneys Lee J. Davis and Tony G. Jones, has decades of experience helping Utah residents obtain debt relief. We understand what you’re going through, and we can guide you toward a brighter financial future.
The foreclosure defense attorneys at the Law Office of Davis & Jones, P.C., are known for their expertise in assisting individuals and families who are behind on their mortgage payments. We represent clients who want to prevent foreclosure, and we’d be happy to help you keep your Salt Lake City home. For a free legal consultation, contact us today.