Bankruptcy and Foreclosure

Published on July 11, 2020 by J. Andrew Meyer

Bankruptcy and Foreclosure

Unfortunately, in today’s unstable and uncertain job market, it is not uncommon for Americans to be faced with losing their homes. What many people do not know is that bankruptcy may be a way to not only keep your home, but a way to eliminate the debt that has caused you to fall behind on your bills. While bankruptcy will not wipe away your mortgage obligation, it may provide the necessary breathing room for you to catch up on your payments and ultimately save your home. This article discusses the pros and cons of filing for bankruptcy while facing foreclosure, and how each affects one another. Both foreclosure and bankruptcy can be complex legal processes, so it is important to consult with an experienced bankruptcy attorney to determine which course of action best fits your financial situation.

My Home Is Currently In Foreclosure, Will Bankruptcy Help?

There is no simple answer to that question but suffice to say that all bankruptcy filings create an automatic stay on any other current legal proceeding. In other words, filing for bankruptcy will put a hold on the foreclosure process. This does not mean that you are no longer responsible for paying your current mortgage or any past due balance. In fact, your lender could apply to the bankruptcy court to lift the stay and proceed with the foreclosure. This process also takes time which may allow you to generate the necessary funds to pay your past due balance. No form of bankruptcy will wipe out your current mortgage obligation.

Chapter 13 Bankruptcy And Foreclosure

Traditionally, Chapter 13 bankruptcy avoids the liquidation of assets by requiring the debtor to make a combined monthly payment that goes toward the pre-bankruptcy debt. If you are facing foreclosure, Chapter 13 may help by consolidating your past due mortgage balance with your other eligible debts. If approved, each month you will be required to pay a predetermined amount of your debt in addition to your current mortgage payment. Typically, Chapter 13 payments last for five years, so it’s important to factor that period into your long range planning. If you are able to make all of your payments under the Chapter 13 repayment plan, you will be able to avoid foreclosure and stay in your home.

Chapter 7 Bankruptcy And Foreclosure

In the unlikely event that you are facing foreclosure and have little to no debt outside of your past due mortgage payments, filing for Chapter 7 will only buy you some time to catch up on your payments. Since your past due mortgage payments will not be discharged, there would be little reason to file for Chapter 7 in that instance. However, most homeowners facing foreclosure also owe additional debt. In that case, if you can get that debt eliminated and buy yourself some time to catch up on your mortgage, Chapter 7 may make sense for you. No matter what option you are considering, it is always best to first consult with an experienced bankruptcy attorney whose guidance can allow you to make the decision that is best for you and your family.

Florida Bankruptcy Attorneys

The attorneys and staff of The Bankruptcy Team have decades of combined experience helping clients with mortgage modifications, foreclosure defense and bankruptcy alternatives to effectively resolve their financial problems. If you are dealing with an unmanageable debt situation and are contemplating bankruptcy, reach out to The Bankruptcy Team to consult with one of our bankruptcy attorneys today.

J. Andrew Meyer

Andrew Meyer was born in Deland, Florida, in 1970. He graduated with an International Baccalaureate Degree from St. Petersburg High School in 1988, and attended the University of Florida, graduating in 1991 with a degree in Economics awarded with High Honors. Mr. Meyer also attended law school at the University of Florida, receiving his juris doctorate degree in 1995. While at the University of Florida, Mr. Meyer was inducted into Florida Blue Key and Phi Beta Kappa. Mr. Meyer was first trained as a lawyer by Richard T. Earle, Jr., and thereafter worked at the Attorney General's Office for the State of Florida in the Bureau of Criminal Appeals before becoming a senior staff attorney for the Florida Second District Court of Appeal. Mr. Meyer also served as a law clerk to the Honorable Chris W. Altenbernd, Retired, at the Second District Court of Appeal. Following his time at the Second DCA, Mr. Meyer worked at Carlton Fields, focusing his practice on appellate matters. In 2004, Mr. Meyer became an advocate for consumers as a partner at James Hoyer, and then later moved to Morgan & Morgan's class action department in 2009.

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Bankruptcy and Foreclosure