How to Prevent Foreclosure: When to File for Bankruptcy

If you’re trying to prevent foreclosure and protect your home, knowing when to file for bankruptcy is a major consideration. Since a bankruptcy will either discharge or reorganize your debts, it’s crucial to file at just the right time to maximize your ability to prevent foreclosure. Though a Florida bankruptcy attorney will help you complete the process, only you understand when your status of your finances and mortgage loan are at risk.

Once you recognize the status of your finances, it is important to speak to your attorney as soon as possible so that you can understand your options. By identifying your options, you can take the necessary action toward stopping foreclosure either before it starts or in its tracks.

Filing for Bankruptcy to Avoid Foreclosure

One of the biggest misconceptions of American homeowners is that you must wait until your home is in the middle of foreclosure to file for bankruptcy. While it is true that many individuals do wait until their home is in foreclosure to seek advice from a bankruptcy attorney, there are no foreclosure requirements set forth by the United States Bankruptcy Code. Working with a bankruptcy attorney will ensure that you meet all legal requirements and take the actions necessary to protect your home.

When filing for bankruptcy to prevent foreclosure, you must consider:

  • Income. Instead of considering your debts (such as your mortgage loan), your focus should be placed on your income. Since bankruptcy gives you the opportunity for a fresh financial start, your income and ability to address your debts should be your biggest consideration. Of course, working with a bankruptcy attorney will help you understand your entire financial profile and address your total debts. Your bankruptcy attorney will help you maximize your filing to potentially reach compromises that eliminate accrued interest or outstanding penalties.
  • Expert assistance. Because bankruptcy and foreclosure laws are so complex, it’s vital to work with a bankruptcy attorney through every step of the process. Even the smallest mistake during your filing could have major consequences and backfire. The only way to ensure your filing is accurate is with the help of a bankruptcy attorney.
  • Timing. Again, you do not need to wait until your home is in foreclosure to file for bankruptcy. If you anticipate foreclosure because you are having issues with paying your bills, then it is time to file for bankruptcy before things get worse. It is not unusual for people who are struggling with their everyday bills to eventually have trouble paying their mortgage payments. Bankruptcy can help you avoid many financial headaches in the future.

Using Bankruptcy to Stall Foreclosure

Using bankruptcy to stall foreclosure is a tactic that people use in order to give them time to find another place to live. They can also use the time to work with the bank to rectify the payments that are in arrears. This is possible because the filing of the bankruptcy petition results in an automatic stay that says creditors can’t attempt to collect on a debt or they are in violation of the stay.

Something to consider when using bankruptcy to stall a foreclosure is that you are only given a 30-day stay if you have filed bankruptcy twice in the past 12 months. You can have your attorney file a motion to extend the stay. If bankruptcy is filed three times within the past 12 months, then there will be no stay at all without filing a hearing on short notice in order to establish a stay. Most people file just one time, so these exceptions are not typically an issue.

Another thing most people do is use the stay period solely for stalling the foreclosure so they can stay in their home longer rather than trying to rectify their mortgage. This is because they may not have the proper legal guidance to realize that they can stop the foreclosure process and possibly utilize one of a number of methods, such as loan modification, in order to get back on track.

All in all, bankruptcy is not just a way to relieve yourself of heart-wrenching debt, but it’s a way to keep you in the home you love. Many individuals have lost their homes to foreclosure, but you don’t have to be one. Instead, get the legal help you deserve so you can better understand your situation and your options.

Bankruptcy as a Foreclosure Solution in Florida

Our law firm has the knowledge and experience to help you pursue debt relief and stop foreclosure efforts. Contact our attorneys at Debt Relief Legal Group to schedule a free initial consultation. Call us at 1-800.DEBT.RELIEF (332.8735) or send us an e-mail to get started today.

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