What happens to a pending foreclosure when I file a Chapter 7 Bankruptcy_

When you file for Chapter 7 bankruptcy, an automatic stay goes into effect that prohibits most creditors from taking further action to collect a debt. This includes lawsuits, wage garnishments, and other collection efforts. If you are facing a pending foreclosure and file for Chapter 7 bankruptcy, the automatic stay will typically halt the foreclosure process until the bankruptcy case is resolved.

However, it’s important to understand that the automatic stay is not permanent and may be lifted by the court if the creditor requests it. For example, if the creditor can show that the automatic stay is causing them undue hardship, the court may allow the foreclosure to proceed.

In addition to the automatic stay, Chapter 7 bankruptcy may also provide other forms of relief for individuals facing a pending foreclosure. Depending on the specific circumstances of your case, Chapter 7 bankruptcy may allow you to:

• Discharge certain unsecured debts: If you have other debts, such as credit card debt or medical bills, that are contributing to your financial distress, Chapter 7 bankruptcy may allow you to discharge (eliminate) these debts. This may help you free up additional funds to put toward your mortgage payments.
• Redeem the property: Under certain circumstances, you may be able to “redeem” the property by paying the creditor the current value of the property in a lump sum. This may allow you to keep the property and avoid foreclosure.
• Strip off a second mortgage: If the value of your home has decreased significantly and the amount you owe on your first mortgage is more than the value of the home, you may be able to “strip off” the second mortgage. This means that the second mortgage would be treated as an unsecured debt and would be discharged in the bankruptcy case.

It’s important to understand that Chapter 7 bankruptcy may not be the right solution for everyone. If you are facing a pending foreclosure and are considering bankruptcy as a potential solution, it’s important to seek the advice of a bankruptcy attorney. A bankruptcy attorney can help you understand your options and guide you through the bankruptcy process.

In order to be eligible for Chapter 7 bankruptcy, you must pass a means test, which compares your income to the median income for your state. If your income is above the median income, you may not be eligible for Chapter 7 bankruptcy and may need to consider Chapter 13 bankruptcy instead.

Chapter 13 bankruptcy is often referred to as a “reorganization” bankruptcy because it involves the creation of a repayment plan to pay off a portion of the individual’s debts over a period of three to five years. If you are facing a pending foreclosure and are eligible for Chapter 13 bankruptcy, you may be able to have the foreclosure process halted and pay off the mortgage arrears through the bankruptcy repayment plan.

In order to be eligible for Chapter 13 bankruptcy, you must have a regular income and your debts must fall within certain limits. If you are facing a pending foreclosure and are considering bankruptcy as a potential solution, it’s important to seek the advice of a Montgomery County bankruptcy attorney. A bankruptcy attorney can help you understand your options and guide you through the bankruptcy process.