Dealing with financial problems is life changing for any New Jersey resident. When trying to address these issues, some individuals decide to file for personal bankruptcy. Facing a foreclosure is a reality some face when dealing with debt and financial problems, and they seek to understand how to avoid or delay foreclosure during a debt relief process such as bankruptcy.
Filing for Bankruptcy
Individuals and families file for personal bankruptcy for various reasons, but the major reason is to address financial problems and possibly halt or prevent the repossession of property such as a home. If a lender has already initiated the foreclosure process, the borrower could delay the foreclosure process or even stop it by filing for bankruptcy. An automatic stay, which occurs during the bankruptcy process, puts a stop on all the debt collection activities occurring.
The delay caused by the automatic stay could allow the borrower to use that time to save up money. In some cases, the borrower is able to use this money to become current on a mortgage. If they are not able to save up the necessary funds to become current on their mortgage payments, the delay could be utilized to negotiate with the lender.
Foreclosure and Bankruptcy
Once the bankruptcy court lifts the stay on foreclosure, the lender could commence the foreclosure process if the lender has not become current with their payments or an agreement has not been reached. If this is a possible outcome, the borrower might consider selling their home and using the proceeds to repay the lender. In some cases, the current worth of the home is less than the amount owed to the lender. If this is the case, the borrower might consider requesting the lender accept a short sale.
While filing for bankruptcy could help delay the foreclosure process, it is not a step taken to ultimately avoid a foreclosure. Those struggling with debt and possible foreclosure issues should seek advice about their options. This could help them through their financial troubles and navigate the possible solutions available to them.
If you are considering filing for bankruptcy, contact our offices today.
Source: Findlaw.com, "How to Avoid Foreclosure"