Filing For Bankruptcy
Bankruptcy is controlled by state and federal laws. You should carefully weigh the consequences
of bankruptcy vs. foreclosure. You should talk to a lawyer or approved counselor from the
Department of Housing and Urban Development before coming to a decision about whether or
not to declare bankruptcy. When bankruptcy is declared the courts issues an
"automatic stay", which tells all credit holders to stop collection activities immediately,
this includes the lender. This stay remains in place until your case is resolved or until the
lender gets permission from the court to "lift the stay" and proceed with the foreclosure. In general there are two types of bankruptcy filings, Chapter 7 and
Filing Chapter 7 Bankruptcy
A Chapter 7 bankruptcy usually lasts around 3-4 months, during which time the foreclosure
proceedings are stopped. However, after the 3-4 months the foreclosure procedure will resume.
Note that the lender may get court permission to proceed with the foreclosure during the
bankruptcy hearing. Filing under Chapter 7 won't allow you to keep your house. Instead it
gives you some time to live and save money that you can ultimately use to find a new
place to live. A Chapter 7 bankruptcy will also wipe out any unsecured debt such as credit cards,
and medical expenses. It also will not hold you responsible for tax liabilities for loss
incurred by the lender at the foreclosure sale.
Filing Chapter 13 Bankruptcy
A Chapter 13 bankruptcy may actually allow you to keep your property, because you make a repayment plan to repay the defaulted amount and the rest of the loan as well. Although Chapter 13
may sound like a good idea, you might not be able to afford the repayment plan approved by
The decision on whether or not to declare bankruptcy is an important one, since bankruptcy
stays on your credit report for usually up to 10 years. Be sure to discuss the option of
bankruptcy with an experienced bankruptcy lawyer before making a decision.
Return from Filing For Bankruptcy to Foreclosure Information