If you’re like most people, your home is a safe space to retreat to at the end of the day. Not only can you seek comfort in your home, but it’s also the place where you make memories with your loved ones. That’s why learning that your home is facing foreclosure can be incredibly jarring. As such, understanding your legal options during these times is critical. The following blog explores what you can do to help prevent bankruptcy in the event you are facing a considerable amount of debt. You’ll also learn how an Orange County consumer bankruptcy lawyer can help you through the process to help you retain your home.
What Is a Foreclosure?
If you receive a notice that your home is being foreclosed, understanding exactly what this means is critical to ensuring you take the necessary steps to procure the best possible outcome.
When you purchase a home, you’ll likely need to apply for a mortgage. This type of secured loan uses the property as collateral, meaning it can be taken if the homeowner defaults on payments. As such, if you fail to make mortgage payments, the lender can foreclose the home. This means they will repossess the property and sell it to another party as a means of getting the money they lost from the missing payments.
Can Filing Bankruptcy Prevent This?
Receiving notice that your home is being foreclosed can be incredibly terrifying. As such, it’s imperative to understand your legal options during these matters. If you have explored all potential debt relief options only to find none of them are viable for your circumstances, filing for bankruptcy may be in your best interest.
When you declare bankruptcy, you are granted an automatic stay. This means that all collection efforts against you from all creditors must immediately stop. This includes foreclosure. If the lender wishes to continue foreclosure on your home, they must petition the court first to lift the automatic stay.
It’s also important to understand that in some instances, the automatic stay can reverse the action taken by creditors. If your home is sold by the creditor after you have formally filed bankruptcy, the sale must be reversed.
In addition to the automatic stay, if you file for Chapter 13 bankruptcy, you will be placed on a debt repayment plan for three to five years. As such, this allows you to catch up on the mortgage payments, further helping you avoid having your home foreclosed.
If you’re in debt and considering bankruptcy to help prevent the foreclosure of your home, it’s imperative to discuss your circumstances with an experienced attorney. At the Law Offices of Michael D. Pinsky, P.C., we understand that the prospect of losing your home can cause a considerable amount of anxiety. That’s why our firm is committed to doing everything possible to assist you during these matters. Connect with us today to learn how we can help you explore your options.
