In the event you are facing a foreclosure and you want to keep your home, you need to take action as soon as you learn you are in danger of losing your home. One action that could potentially save your home is filing for a bankruptcy. Before filing for bankruptcy, here is what you need to know.
Why File for Bankruptcy?
When you file for bankruptcy, the documentation goes to the court and an automatic stay of all your debts goes into effect. The automatic stay keeps your lender from going to court to foreclose on your home. It even stops a foreclosure sale if it has already been scheduled.
If you don't have much time before your lender goes to court, you might have to file for an emergency bankruptcy.
What Is an Emergency Bankruptcy Petition?
An emergency bankruptcy petition gives you a chance to stop your lender from doing anything to take your home without having to file all of the documentation that is normally required for bankruptcy. With an emergency petition, you only need to file a list of your creditors, the bankruptcy petition, and a certificate showing that you have completed the credit counseling requirement.
If you have not had a chance to take the credit counseling, it is imperative that you explain why with your petition. If not, your request for an emergency intervention could be denied.
What Happens After the Filing?
Once the documentation is accepted by the court, all of your lenders are notified of your intent to file bankruptcy and the automatic stay goes into effect. It is important that you work with your foreclosure attorney while the stay is in place to save your home. Your attorney can reach out to your lender and attempt to work out a new payment plan that you can afford. The amount that you are in arrears for can be included in the new plan.
You can also explore other options to save your home, such as taking out another loan or applying for state and federal assistance programs designed to help homeowners.
Whichever option you opt to use to try and save your home, it is important that you work with your attorney to fully explore what is available to you. Without consulting with an attorney, you could miss out on an option that would work best in your particular situation. For more information, contact a practice like Hornthal Riley Ellis & Maland LLP.