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If i file for bankruptcy will it stop the foreclosure?

Date: Wed, 12/27/2006 - 06:34
Submitted by on Wed, 12/27/2006 - 06:34
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If I file for bankruptcy TODAY, will it save my home even if it has already been legally set for foreclosure sale and I received notice of the date? (2/6/07) I am 52 yrs old and without a job. My husband (age 46) works for Marriott, but does not make enough to make the house note (barely enough to even pay the utility bills and survive). I have to refinance or sell my home by 2/6/07 or Chase Bank is going to auction it off and foreclosure will be added to my already "without hope" credit record. My total debt is well over $75,000 not including the house with a mortgage balance of approximately $116,000. Some of this total is well over 10 years old from a previous marriage, but they still send the collection letters and "settlement offers") which without a job I can't take advantage of because I don't have even the offered amount. I have been a legal secretary for over 28 years, but even if I was fortunate enough to have a firm hire me this week, I will be in my grave before everything is paid off and the mailbox is free of collection letters. I consulted a "debt relief attorney" over a year ago, only to add 3 monthly invoices to all the others with no results before I canceled his "services." I feel bankruptcy is my only option. I have a 10 year old daughter and very much want to stay in this house (school district reasons) until the end of next year's school term. I want to file for bankruptcy but haven't for fear of making "another" mistake. I have asked God for guidance over the past months, and a friend has assured me that He will take care of me and my family, but I don't believe waiting until auction day for a miracle is the way to handle this. So, first things first. 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


Submitted by SUEBEEHONEY70 on Wed, 12/27/2006 - 06:51

SUEBEEHONEY70

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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.


Submitted by on Wed, 12/27/2006 - 07:08

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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.


Submitted by SUEBEEHONEY70 on Wed, 12/27/2006 - 07:10

SUEBEEHONEY70

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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 13 filers will also have a tough time

Under the old laws, the debtors arranged the repayment plan after paying the actual living expenses from their disposable income. New laws state that disposable income will be calculated as per the allowed expenses dictated by the IRS. If that disposable income passes the means test as per median in your state, then only chapter 13 is possible.

The worse is yet to come: the allowed expense amounts have to be subtracted from the filer's average income during the six months before filing. Under the old laws, the subtraction was done from the actual income of that month and the previous six months income was not compared. This means that the overall disposable income will grow higher and as a result chapter 13 will also be tough to file.


Submitted by PassionHunting on Wed, 12/27/2006 - 08:51

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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


Submitted by KYSIDE38 on Wed, 12/27/2006 - 12:00

KYSIDE38

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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.


Submitted by SUEBEEHONEY70 on Wed, 12/27/2006 - 18:19

SUEBEEHONEY70

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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


Submitted by KYSIDE38 on Wed, 12/27/2006 - 19:51

KYSIDE38

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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.


Submitted by DebtFairy on Wed, 12/27/2006 - 22:04

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