Will Bankruptcy Stop a Foreclosure?
In most cases, bankruptcy will stop foreclosure. When you file bankruptcy, the Automatic Stay found in 11 USC § 362 goes into effect. This prohibits your creditors from proceeding with any collection activities against you including foreclosure, repossession, garnishment, collection calls, and collection letters. So once your creditors receive notice of your bankruptcy then they must stop all actions against you including foreclosure. Thousands of people file bankruptcy every day to save their homes.
Foreclosure Proceedings in North Carolina
If your home is in foreclosure then it is important to speak to a bankruptcy lawyer right away! In North Carolina, your mortgage lender is required to serve you with a Notice of Hearing before the foreclosure hearing is held. At the foreclosure hearing, the Clerk of Court will decide whether your mortgage lender should be allowed to proceed with the foreclosure sale. If the Clerk enters an Order allowing your mortgage lender to proceed with the foreclosure sale then in most cases the sale will be held within 20 days after the hearing.
When Should I File Bankruptcy to Stop Foreclosure?
Once the foreclosure sale is held there is a 10 day redemption period (often referred to as the upset bid period). If you file bankruptcy at any time before the completion of the upset bid period then the foreclosure will be stopped. But if you wait until the 10 day upset bid period expires then your home will most likely be lost forever.
During the foreclosure process, the law firm conducting the foreclosure will charge attorney fees that will most likely be added to your loan. If you file bankruptcy then the foreclosure is stopped and so are the foreclosure attorney fees. For most people, it is better to file bankruptcy either before the foreclosure begins or as early in the process as possible to avoid having to pay the additional attorney fees. But in any event, if you want to have the chance to save your home then you must file bankruptcy before the upset bid period expires.
Should I File Chapter 13 or Chapter 7 to Stop a Foreclosure?
Chapter 13 bankruptcy gives you the opportunity to bring your mortgage current. Unlike Chapter 7, Chapter 13 is designed to allow you to repay your past due mortgage payments over 3-5 years in order to catch up on your mortgage. That is right! As long as you pay your plan payments every month then at the end of the Chapter 13 bankruptcy your mortgage will be current and you will no longer have to worry about foreclosure. But that is not all! In most cases, your car loan will be paid off too and you will no longer have any credit card or medical debt.
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- The Power of Chapter 13 Bankruptcy
- Can I File My Own Bankruptcy?