A lot of people face severe foreclosure consequences every day and one of the questions that they ask after looking for various options to stop it, like hardship letters, government aid and refinancing, is this: does bankruptcy stop foreclosure? As drastic as it might sound and although it really shouldn’t be turned to until it is the final option available, bankruptcy will undoubtedly work in stopping home foreclosure.
If you think about it, bankruptcy might actually be much more preferable in place of foreclosure since it can get rid of all of your debt and help you build a better credit score much faster. A foreclosure, on the other hand, would affect your credit score in a very bad way and it won’t cancel out any of your debts, either. This means that you will have a much longer time building up your credit again at the end of the day.
Yes, without a doubt, bankruptcy is the fastest way to eliminate all of your debts, including your mortgage debts, and help you start a whole new financial life. By filing for Chapter 13 bankruptcy, you can get rid of all of your mortgage debts without even worrying about lenders coming after you and asking you for payments.
Chapter 13 bankruptcy won’t just protect you from previous lenders, either. It will even protect you from ever getting sued over house mortgage issues again. Plus, it will help you get over other kinds of debts at the same time, such as car and credit loan debts. Keep in mind, though, that although you will be able to forget all of your past debts, you might still lose your house at the end of the day. However, for the question, “does bankruptcy stop foreclosure”, the answer is definitely “yes”.
The best part about bankruptcy is that your life will be free of those annoying phone calls from previous lenders and creditors about your house. In fact, the mere act of filing for bankruptcy in itself will leave you with an “automatic stay”, which means that creditors will no longer be allowed to try and collect the money that you owe them from you. This stay will be active for several months while the proceedings for bankruptcy are being held. Keep in mind that this stay can be lifted, though. If worse comes to worst, a lender might even proceed with the initial foreclosure if you started your bankruptcy proceedings too late.
Keep in mind that, although bankruptcy might erase all of the debt secured by your home, the trustee will liquidate and collect any of your nonexempt assets in the end in order to pay off your creditors. This means that your foreclosure might not be cancelled and could be used as a form of collateral. In a nutshell, the question you should ask really shouldn’t be “does bankruptcy stop foreclosure?”, but rather “would you rather declare bankruptcy and get rid of all your debt or lose your home and still swim in debt anyway?” The choice is yours.