Stop Home Foreclosure

 

The Los Angeles Bankruptcy Firm helps people throughout Southern California utilize all the tools available to them in a Chapter 7 or Chapter 13 bankruptcy to delay or avoid a foreclosure on their home wherever possible.A home mortgage is a secured debt.  The debt itself – the note or mortgage – is secured by collateral – the home – and the terms of the mortgage give the lender the legal right to foreclose on the home (repossess) if payments are not being made.  How the filing of a bankruptcy affects the foreclosure process depends primarily on which type of bankruptcy is filed.

 

The Automatic Stay

Any bankruptcy filing invokes what is known as an automatic stay.  This means that all creditors are put on notice that a bankruptcy has been filed, and they must immediately cease all efforts to collect on any debt while the court determines how that debt will be handled through bankruptcy.  This automatic stay applies to home foreclosures as well.  If nothing else, a foreclosure will be halted during a bankruptcy proceeding and will not resume until completion of the process, which may take several months.It is possible in certain circumstances for a creditor to go to court asking for relief from the automatic stay.  If this happens, a mortgage holder could proceed with a foreclosure even during the bankruptcy.  This type of contested matter and all other forms of bankruptcy litigation are handled by the effective trial advocates at The Los Angeles Bankruptcy Firm.

Chapter 7

As noted above, a home mortgage is a secured debt, and therefore cannot be discharged in a Chapter 7 bankruptcy.  However, a foreclosure generally cannot be started or continued during a bankruptcy due to the automatic stay.  It is possible that after the conclusion of the bankruptcy and discharge of other debts, the debtor may have enough disposable income to negotiate a workout with the mortgage lender.  At the very least, foreclosure has been forestalled for many months during the pendency of the bankruptcy, and the debtor has not been forced out of the home in the midst of everything else.  See our pages on Chapter 7 bankruptcy and Chapter 7 FAQs for more information on when a home can be saved from Chapter 7.

Chapter 13

Chapter 13 allows you to catch up on your missed mortgage payments as part of the debt restructuring plan.  As long as you can meet your monthly payments going forward, you can avoid foreclosure and stay in your home.  Also, through a process known as lien stripping, it is possible in some cases to convert second or third mortgages to unsecured debt, where they will receive lower priority or perhaps be discharged by the bankruptcy court.  Saving a home from foreclosure is in fact one of the most attractive aspects of Chapter 13 for those who can successfully implement the court-ordered wage earner’s plan.

 

Seek Experienced Legal Representation

If you have already received notice of foreclosure, you must act quickly to stay in your home.  Contact attorney Sina Maghsoudi for a free consultation regarding the options that are available in your particular situation.