Posted On: October 20, 2010

How does Filing Bankruptcy Assist with Foreclosure?

A Sacramento bankruptcy attorney discusses how bankruptcy affects foreclosure.

Filing for bankruptcy invokes the automatic stay which is an injunction against all acts of collection. If your home is set for sale and bankruptcy is filed then the sale is an act of collection that must be stopped. A good practice is to fax a court stamped copy of your petition to notify the lender and foreclosure trustee that a bankruptcy was filed. Lenders will respect the automatic stay and no proceed with foreclosure.

Bankruptcy will likely give around 1-2 months before the home is subject to relief from automatic stay. These 1-2 months will allow for a home owner some time to make preparations for moving. The borrower can try to ask the lender for ‘cash for keys’ where money is given for moving expenses. Money for moving may deflate a borrower’s anger and prevent any damage to the property.

After the filing of bankruptcy, the lender will request the court to remove the property from protection of the automatic stay. The requirement for relief from stay is delinquency in payments. After relief from automatic stay the home is then set for sale.

A chapter 13 allows for the restructuring of debts per a proposed plan. Here a borrower can use Chapter 13 to cure the amount they are behind on while paying the ongoing home loan payment all while being protected by the automatic stay.

We can answer all your questions regarding filing a Chapter 7 bankruptcy, a Chapter 11 bankruptcy, a Chapter 13 bankruptcy, bankruptcy litigation, legal debt settlement, mortgage modification, lien stripping, cram down, stopping a foreclosure, wage garnishment, discharging a debt, asset protection, etc. If you need help regarding a bankruptcy in Sacramento, call us at 916.792.6025 or and we will be more than happy to offer you a free consultation over the phone. You can also fill out a free online evaluation at our website,, or request a free face to face appointment at a Bankruptcy Law Firm office location close to you. We have bankruptcy attorneys located throughout California and Oregon to assist you with all your debt resolution needs.

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