How Does Bankruptcy Stop Home Foreclosure In California?

If you are facing foreclosure, bankruptcy offers two choices: 1. Delay foreclosure so that you can save money and find another place to live (Chapter 7 bankruptcy); or 2. Save your house be catching up on past due mortgage (Chapter 13 bankruptcy).

Here are more details on how bankruptcy can stop your home from being foreclosed:

The Automatic Stay: Instantly upon you filing bankruptcy, the court automatically issues an order -- called a “stay order”, or an “order for relief.”  It automatically directs your creditors to stop all their collection activities. If your home is scheduled for a foreclosure sale, the sale date will be canceled.  The Automatic Stay is issued in both Chapter 7 cases and Chapter 13 cases.

A Chapter 7 Delays Foreclosure Proceedings: 
Filing a Chapter 7 Bankruptcy will delay a foreclosure between two and four months.  A lender may file a motion seeking relief from the “stay order.”  Essentially, the lender seeks the bankruptcy court's permission to proceed with the sale.  It is usually granted because the homeowner is behind on payments.  If this motion is filed soon after you file bankruptcy, foreclosure will be typically delayed by two months.  Sometimes a lender does not file a motion.  They will be allowed to proceed with foreclosure about three of four months after filing your case.  Thus, during a Chapter 7 bankruptcy, you can live in your home for free for several months while your bankruptcy is pending. You can then use that money to help secure new shelter.

A Chapter 13 Can Save Your Home:  
Chapter 13 bankruptcy, on the other hand, is a great tool to save your house from foreclosure.  After the case is filed, our office works with you to prepare a plan to catch up on the payments are past due.  The plan has to be crafted so as to be caught up with payments in a five year time frame/60 months.  For example, if a homeowner is behind $30,000, the homeowner can make $500 a month payments over 60 month time frame.  The homeowner will also need to make the regular monthly house payment during the plan period as well.  These plans can be tough, but with hard work and a disciplined budget, your home can be saved.    

Attorney Ken Jorgensen is located in Clovis, California.  He handles personal, property and business disputes, including bankruptcy and eviction cases in California.  You can find out more about Ken on Facebook, or at his websites, www.fresnolawgroup.com and www.fresnobankruptcylawgroup.com.  He can be reached at [email protected] or by telephone at 1-559-324-1882.
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