How to Avoid Foreclosure with an Automatic Stay

Are you so behind on your mortgage payments that you could soon lose your home to foreclosure? Well, there may be a way out, and it is probably not the way you were thinking. The answer lies in Chapter 13 bankruptcy.

First of all, Chapter 13 bankruptcy gives a person the opportunity to reorganize their debts. What this means is taking all or part of the debt owed and placing it into a court-approved payment plan for a period that lasts between 36 to 60 months. The mortgage can be made a part of this payment plan in order to avoid going into foreclosure.

But if the situation is a more desperate one and you are wondering how to avoid foreclosure, there is another element to filing bankruptcy. That element is the automatic stay that is established when your bankruptcy attorney files your bankruptcy petition with the court.

The Automatic Stay

The automatic stay is important when you are facing foreclosure. The realization that you may lose your most valuable financial asset is a stressful experience. There are times when there may not be a way out, but there are also times when an exit strategy is waiting for you behind the next door. The automatic stay is one of those strategies found in the rules and regulations of Chapter 13 bankruptcy.

When you file for Chapter 13 bankruptcy with a bankruptcy attorney, the court will immediately issue what is known as an ‘order of relief.’ Inside this order of relief is the automatic stay. Your bankruptcy attorney will explain the automatic stay as essentially a temporary shield of protection from collectors. Even if your home is scheduled for foreclosure in the near future, the automatic stay postpones the lender from pursuing the sale until the bankruptcy process is complete. This will typically take three to four months and gives you the window that you need to bring the mortgage current.

The Exceptions to the Rule

It is important to know that there are two exceptions to the automatic stay. The first is if a “motion to lift the stay” is filed by the lender and approved by the court. This can reduce the postponement of foreclosure to only a month or two. That means the window to bring the mortgage current is a small one.

Just keep in mind that the bank is going to prefer to work with the homeowner when possible. This is because they lose lending power each time they foreclose on a property. If you are able to make it right and can give the bank sufficient evidence that you can stay on track like you once were, then you may be able to get them to work with you and stop foreclosure. Your attorney can help you determine which methods can help you prevent foreclosure, if any, and provide the proper guidance toward implementing the methods that may work for you.

How the Automatic Stay Applies in Chapter 7

When you file Chapter 7 bankruptcy, your assets are a part of the bankruptcy estate. A bankruptcy trustee is appointed by the bankruptcy court to liquidate your assets and use the money to pay off as much debt as possible. The automatic stay is actually meant to give the trustee time to sell property. The estate benefits because of the money acquired to pay off debts, but you can benefit by using it as the time needed to reinstate your mortgage.

How the Automatic Stay Applies in Chapter 13

In Chapter 13 bankruptcy, the automatic stay gives the window needed to restructure debts in order to avoid foreclosure. Because Chapter 13 involves a payment plan, you have to ensure you can keep up with your current mortgage payments and any payments in arrears that accrued before the bankruptcy filing. Nonetheless, the Chapter 13 plan can allow for the curing of liens against the home and payments in arrears.

To better understand how an automatic stay can apply to you, you can enlist the services of an experienced Florida bankruptcy attorney to protect yourself and increase your ability to stay in your home. Another exception is if the foreclosure notice has already been filed. If you have already received a notice of default from your lender, it is unlikely that a bankruptcy filed after this time will have any effect.

Understanding the Automatic Stay 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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