If i file for bankruptcy will it stop the foreclosure?

Hi Rosalie - welcome to the forums!

To answer your question in a word, yes. If you file for Chapter 13 bankruptcy, it will stop foreclosure up to the point of the auction. But you definitely need to make your attorney aware of how close you are to the auction date and that time is of the essence in your case.

In most cases I have seen, a Chapter 7 bankruptcy will not stop you from losing your home - only a Chapter 13 will.

You will need to pass a "means test", which will be the deciding factor on which chapter of bankruptcy you are allowed to file. The laws for bankruptcy changed some time ago, and it's no longer easy or cheap to file and have your debts wiped out.



A Chapter 13 bankruptcy is a "wage earner" bankruptcy, in which a repayment plan is set up, and your debts are paid through a trustee of the court. A Chapter 7 bankruptcy is a total liquidation of your debts.

If you are going to go with bankruptcy, make sure you give all your information to the attorney - do not hold anything back, because it will only hurt you in the long run if you do.

Please keep in mind, if you do not qualify for a Chapter 13 by the means test, your attorney will recommend you file a Chapter 7, which may not save your house

the difference in the process of filing for "11" or "7" and what the "means test" consists of? And, are all states the same? I'm in Texas. I appreciate your time and thank you for the info.

Rosalie -

I'm not sure where Chapter 11 came in, but you will need to provide your income and debt information to your attorney, and they will perform the means test based on that information.

I really think your only option is Chapter 13, if you qualify for it. Your attorney will determine which chapter you qualify for.

I would get in touch with your attorney or find a bankruptcy attorney ASAP. This will stop the foreclosure, but like Sue said, you will need to qualify.

Go to this link to know the requirements in the Means Test. You will have to qualify in the test before any of your debts are discharged in bankruptcy.

Read this part carefully

Quote:

Chapter 7 puts you in a stay. This can give you a little time to catch up the payments. If you want to keep the property you can reaffirm. If you dont reaffirm and the house is included then if you miss payments its gone in foreclosure. KYSIDE38

The problem with the stay is that the mortgage company can turn right around and file a motion to lift the stay so they can proceed with foreclosure. Yes, the stay buys you time, but precious little. And some companies will not reaffirm. My mortgage was sold to a "mortgage servicing company" before I even made the first payment on the house, and the company that has it now will not reaffirm - my attorney contacted them and asked - they said they are not a mortgage company. They are a servicing company only, and just want the money. They don't want to deal with reaffirmations. So if I filed Chapter 7, they would foreclose.

When it goes i to bankruptcy the creditors are not allowed to contact you at all. This gives a person a little time to catch it up. I(f a creditor contacts and harasses you they are violating the federal law. After the court hearing they can foreclose.This is what I was told. Kyside38

Kyside - I think we've both made some valid points, and hopefully, Rosalie will take the info we've given her and go back to her bankruptcy attorney to find the best way to keep her house.

A key point here is that many bankruptcy attorneys do not charge more than the filing fee to get a bankruptcy started. The set up installment payments. That's a good incentive for people who are in a tough financial situation. Also, another key point is that bankruptcy is governed by federal law, so the law is the same in every part of the country. It doesn't matter which state you live in. Another key point missed is that while her secured debts (house, car, etc.) would have to be paid off in full, under a Chapter 13, the trustee pays the debt off at $.30 on the dollar, thus cutting her unsecured debts down by 2/3. That will help her to have some breathing room and get back on track with her secured debts.

Thank you DEb some valuable points I was not aware of. KYSIDE38

thanks Deb - see, you've only been here a short time, and already you're providing valuable, helpful info!

Welcome!

Chapter 11 is dealing with your corporations who file bankruptcy. It is not dealing with consumers.

As far as a foreclosure, once you have entered 13 (which the laws have changed for that as well), they cannot foreclose on your home. Instead they give you the option to pay for it.

Thanks for the clarification on Chapter 11, Alexandra - I thought it was for businesses, but I wasn't sure - didn't have time to look it up! :-)

I am happy to help in my limited way. Guess paralegal school came in handy after all.
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