Can I Fight Home Foreclosure by Declaring Bankruptcy?

 Posted on December 04, 2023 in Foreclosure

The thought of losing your home via foreclosure can be a horrifying idea to ponder. However, it is essential to remember that legal options are available to help you navigate this challenging situation. One such alternative may be to file for bankruptcy. To pursue this potential legal outlet, contact an experienced lawyer in North Carolina to help you decide whether bankruptcy is an effective strategy for you to fight a home foreclosure. Your attorney will ensure you have a strong understanding of the process and can make the best decision possible to protect the well-being of yourself and your family.

Understanding Foreclosure

Foreclosure is a legal process where a lender attempts to recover the outstanding balance on a mortgage loan by selling the property. This typically occurs when the homeowner fails to make timely mortgage payments. However, bankruptcy can potentially provide a way to halt or delay the foreclosure process.

Chapter 7 Bankruptcy in North Carolina

Sometimes referred to as liquidation bankruptcy, Chapter 7 bankruptcy will involve selling non-exempt assets to repay creditors. While it may not directly prevent foreclosure, it can temporarily delay the process through the automatic stay provision. The automatic stay prohibits creditors from taking any collection actions, including foreclosure, against the debtor during the bankruptcy proceedings. 

Chapter 13 Bankruptcy in North Carolina

On the other hand, Chapter 13 bankruptcy provides a more structured approach to fighting foreclosure. It allows debtors to create a repayment plan to satisfy mortgage payments that have been missed over a time span of three to five years. This can be especially useful if you have a regular income and can afford to make the monthly payments outlined in the plan. 

Benefits of Bankruptcy in Fighting Foreclosure

1. Automatic stay – As mentioned earlier, filing for bankruptcy triggers an automatic stay, temporarily halting foreclosure proceedings. This can give you the breathing room needed to explore other options or negotiate with your lender. 

2. Repayment plan – Chapter 13 bankruptcy allows you to propose a repayment plan to help you catch up on missed mortgage payments over time. This can prevent foreclosure and allow you to keep your home while resolving financial difficulties.

3. Discharge of unsecured debt – Bankruptcy can also release unsecured debts, often in the form of credit card and medical bills. This can help free up financial resources, making it easier to meet your mortgage obligations and avoid foreclosure.

Contact a Charlotte, NC Bankruptcy Lawyer

To learn how our legal professionals can assist you, contact the skilled Mecklenburg County, NC bankruptcy attorney with Blossom Law PLLC. Call 704-256-7766 for a free consultation.