Can Bankruptcy Help With Mortgage Foreclosure?
While all kinds of financial problems due to job loss, divorce or medical bills can lead to bankruptcy, the event that puts many people over the edge is notice of foreclosure of their home mortgages. That's when debt pressure can change from unpleasant to desperate.
Bankruptcy can be an effective tool for relieving the pressure of mortgage defaults, and our attorneys at O'Bryan Law Offices have helped hundreds or thousands of people keep their homes. Contact us in Louisville, Frankfort or New Albany to learn more about our solutions to difficult foreclosure problems.
How does bankruptcy help stop home foreclosure?
In legal terms, mortgage foreclosure is nothing more than a creditor's remedy to collect a debt in default. The automatic stay of bankruptcy stops home foreclosures in the same way it interrupts any other debt collection activities.
Bankruptcy law protects secured creditors, which includes mortgage holders. Although the mortgagee can't continue with a foreclosure that has been interrupted by a Chapter 7 or 13 filing, it might have strong grounds to ask the bankruptcy court for permission (seek relief from the automatic stay) to resume or begin anew the mortgage foreclosure process.
Our experience with the negotiation of mortgage defaults can help you
Your legal ability to keep the protection of the automatic stay in place will depend largely on how much equity you have in your home, the more equity you have, the less likely the foreclosure will continue. Questions of fact and law concerning the mortgagee's right to relief from the automatic stay are heard and decided by the bankruptcy judge.
In our experience, the real question is your ability to resume regular monthly mortgage payments. If you can, we can usually negotiate the problem with the mortgage holder. Payments for defaults prior to bankruptcy can be spread out over the repayment period in a Chapter 13 bankruptcy, but the mortgagee will need assurance that future payments will be made as normal.
Working out mortgage problems and preventing future foreclosure proceedings represent a major strength of our bankruptcy practice. We can help you right up to the moment of the sheriff's sale. To learn more about our approach to mortgage foreclosure in bankruptcy, contact one of our lawyers at O'Bryan Law Offices at any of our Kentucky and Indiana locations.