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How Bankruptcy Can Stop Foreclosure Proceedings

Posted By Allmand Law Firm, PLLC || 13-Feb-2014


A bankruptcy filing can immediately stop foreclosure in most cases when proceedings have yet to be finalized. Bankruptcy may help homeowners buy more time in determining their next move including whether or not they want to keep their home. This is also a good time for debtors to review with their bankruptcy attorney about their options and their rights regarding redeeming the property (your home).

Some debtors wait until a foreclosure sale is imminent before they consider bankruptcy. In some cases if the sale has occurred the debtor may have the right to redeem the property by making payments overtime that includes current and past due payments. Keep in mind, doing this may not allow the debtor to catch up on payments and they may have to pay the full amount of what the purchaser paid including interest at the foreclosure sale. This can be an option for homeowners if they can afford it.

When bankruptcy is filed the automatic stay goes into effect which is a legal injunction from the court. It stops actions related to foreclosure even if the creditor is unaware the debtor filed. In some cases a foreclosure can be undone by the bankruptcy trustee if fraud was committed on behalf of the creditor. Foreclosure can be a complex situation to deal with the longer a debtor waits until they take action. This is often why homeowners in default or have missed mortgage payments should consider reviewing their situation with an experienced bankruptcy attorney.


Categories: Foreclosures
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