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Can Bankruptcy Protect My Home From Foreclosure?


If you have fallen behind on your mortgage and cannot afford to pay your bills, you may feel at a loss as to what to do. The creditors are calling, threatening repossession and foreclosure. While you do not want to let your home or belongings go, you fear that you do not have any other choice. But you do have a choice! At The Port Law Firm, our West Palm Beach bankruptcy lawyers have helped countless clients stop foreclosure on their homes, and now we want to put our legal expertise to work for you.

Utilizing Bankruptcy to Stop Foreclosure

Whether you file for Chapter 13 or Chapter 7 bankruptcy, an “automatic stay” will be placed on your possessions immediately after filing. Under an automatic stay, creditors will be forced to cease all collections actions against you, even if they are already in motion. This includes any foreclosure actions against your home. If your home is already scheduled for a foreclosure sale, the sale will be postponed, which may be enough time for you to collect the funds to save your home or if you have filed a chapter 13 cure the arrears and stay in your home.

While Chapter 7 bankruptcy is great for people who want to clear all debt in their name by liquidating the majority of their assets, Chapter 13 bankruptcy is a reorganization bankruptcy. This type of bankruptcy is especially beneficial when it comes to saving your home in that it allows you to pay off your late unpaid payments over a period of up to five years. If you file a Chapter 13, the bankruptcy courts will require you to pay that amount of arrears on top of your current mortgage payments. If you make all of your required payments by the end of your repayment plan, you will be caught up on your mortgage and therefore, able to keep your home.

When You Have a 2nd or 3rd Mortgage

But what if you have a second or even third mortgage. Will bankruptcy be able to help you then? Unfortunately, it all depends. If your home’s entire value is secured by your first mortgage (meaning that your home has dropped in value), that renders the second and third mortgages “unsecured.” We call this ”stripping the mortgage”.  Under Chapter 13, unsecured debts are the lowest priority, and if you successfully complete your bankruptcy case, the mortgages that were “stripped” will be deemed satisfied as paid in full.

When Bankruptcy Does Not Help

While bankruptcy is a viable solution to foreclosure most of the time, there are instances in which bankruptcy cannot help. For instance, if you file a chapter 7 bankruptcy the creditor can file a motion to lift the automatic stay as you would not be trying to cure the mortgage. The court will grant the creditor permission to proceed with the foreclosure sale, which will allow the creditor to proceed with the foreclosure sale, ultimately resulting in a sale of your home.

Additionally, if you file for bankruptcy after the foreclosure sale has occurred, it is too late.  As such, it is important to not ignore the notices you receive from the creditor regarding a foreclosure on your home.  If you receive any type of notice regarding the delinquency on your home mortgage you should contact the Port Law Firm immediately to discuss your options.  If you wait, you may lose your home.

Take Control of Your Finances Today – Contact a West Palm Beach Bankruptcy Lawyer

If you face foreclosure of your home, do not lose hope. Bankruptcy is a viable option for those who wish to take control of their finances but simply do not have the means to do so. If you are tired of lying awake at night and wondering how you are going to save your family home, call The Port Law Firm for a free consultation with an experienced and compassionate bankruptcy attorney. Schedule your free consultation today.


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