Another Bankruptcy option to deal with foreclosure is to file a Chapter 7 bankruptcy. When you file for Chapter 7 Bankruptcy The Automatic Stay which stops most all legal actions against you goes into effect immediately upon the filing of the Chapter 7. The filing of a Chapter 7 Bankruptcy prior to an actual foreclosure sale of a property will remove your personal liability on the mortgage debt and you will not have any further obligation to continue to pay should the property actually be foreclosed on. Chapter 7 Bankruptcy will also provide possible options to avoid certain tax liabilities.
The Chapter 7 Bankruptcy filing will temporarily stop the foreclosure. After you file, the mortgage company must file a Motion to Lift Stay or similar Motion with the United States Bankruptcy Court in order to foreclose on the property. The Motion, which usually takes a minimum period of 20 to 40 days, could even take up to 2 or 3 months depending on the facts of the case and the Bankruptcy Court’s docket. After the mortgage company obtains the legal right in the Bankruptcy Court to take action against the property, the mortgage company must then re-post the property for another foreclosure sale. This process usually takes about a little more that a month and you will continue to own the house until the actual date of the foreclosure sale. You can still live in the house in the meantime because you still own it. Also this might allow you the time needed to maybe sell your home, refinance it, bring the mortgage current, or at the very least, provide you a bit more time to arrange for somewhere to live.
Some people just want to give back or “surrender” the property to the mortgage company. If that is the case, you won’t be making the payments on the property and as such you could use the opportunity to obtain funds for the expenses of moving.
At the foreclosure sale the lender must sell the property and credit the proceeds to your debt. If any money is left over, the lender must pay it to you. Typically, the sale brings in less than the debt which, in most cases, you will technically owe. The Bankruptcy Court will discharge the balance along with your other unsecured dischargeable debts. When you obtain your Chapter 7 Bankruptcy discharge any mortgage deficiency, which go to include your other dischargeable debts are eliminated, discharged or cancelled. These debts never have to be re-paid.
The Changes to the New Bankruptcy Law now have an impact on the automatic stay in that the mortgage company may be able to move quicker depending on the particulars of the case as well as if you are a previous bankruptcy filer. Additionally the filing of a Bankruptcy to simply with the intent to delay creditors is a violation of the law. You should contact an Attorney experienced in Bankruptcy & foreclosure to determine your options. Contact The Law Offices Of R.J.Atkinson,LLC to see how filing a Chapter 7 Bankruptcy may affect your foreclosure.
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