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What is an automatic stay?

On Behalf of | Sep 8, 2022 | Bankruptcy

If you’re facing foreclosure, you may be looking for ways to delay the process. You don’t necessarily need to stop it entirely. You just need to buy yourself a bit more time so that you can get your finances in order, and then you can get current on your mortgage again.

One potential way to do this is to file for bankruptcy. When you do it, it creates an automatic stay. This is a legal tool that means the other court case cannot continue.

For instance, perhaps your lender has already filed for foreclosure. If you file for bankruptcy, that doesn’t cancel the foreclosure entirely. But it does mean that the bank can’t take your home until the bankruptcy has been finished. So you get to stay in your home for longer – perhaps months – and you may be on the path to eliminating the foreclosure entirely.

How would that work?

To use bankruptcy to get rid of a foreclosure, you may simply need to use Chapter 13 to re-organize the debt that you have. You could also use Chapter 7 to eliminate some of that debt, allowing you to allocate money to other expenses. People often use bankruptcy to clear up the other debts that they have so that they can start paying the mortgage again, allowing them to keep their most valuable asset.

What steps should you take?

You’re in a complicated financial situation if you’re considering bankruptcy and facing foreclosure at the same time. But you’re certainly not alone, and this is a path that many people take to solve these types of issues. Make sure you know what steps to take and how this may be able to work for you.