Foreclosure and a Home’s Sale Date—Can Bankruptcy Stop It?

If a lender has placed a home in foreclosure and has already set a sale date for the property, all hope is not lost—it is still possible to save the home by filing for Chapter 13 bankruptcy.  Filing Chapter 13 bankruptcy immediately stops the foreclosure process and allows the homeowner some time to catch up on payments that have gotten behind. 

This means that even if you have already received a notice of foreclosure and a sale date for your home, you still have time and available legal resources to stop the process.  In Chapter 13, your lender is prohibited by the bankruptcy court from continuing any collection efforts and an automatic stay is placed on your assets, including your home.  This automatic stay is not permanent but it will at least give you some time to figure out if you want to fight to keep your home and catch up on payments through the Chapter 13 repayment plan.  

However, just because you can stall the foreclosure process through Chapter 13 bankruptcy doesn't mean this is a wise financial decision.  Since filing bankruptcy doesn't lower your mortgage premiums or the amount you owe for your home, there is still the consideration of “can I afford this home?”  If your home costs more than you can afford, and the mortgage is greater than 30% of your monthly net income, then you should consider the fact that the home might be more than you can reasonably afford—with or without a bankruptcy. 

Filing for bankruptcy has allowed many homeowners to stay in their homes, despite the fact that the lender has already begun the foreclosure process and initiated a sale date for the home.  You can discuss your options with our bankruptcy attorneys and we will be able to help you determine the best course of action.