Can You Use Bankruptcy to Avoid Foreclosure?

Can You Use Bankruptcy to Avoid Foreclosure?When you’re struggling to meet your financial obligations, one of the first debts that can get away from you is your mortgage. Unfortunately, it won’t take long before you find yourself involved in foreclosure proceedings. Perhaps there’s light at the end of the tunnel—you can see that your financial situation will improve dramatically in the near future, but you need to buy some time to get you there. Is it possible to avoid foreclosure with a personal bankruptcy petition?

You Can Suspend Foreclosure Proceedings by Filing for Bankruptcy Protection

There are two strategies available through a bankruptcy filing. You can permanently discharge debts in exchange for the sale of certain assets—a Chapter 7 filing. You must qualify for protection under Chapter 7 by submitting to a “means test,” where you demonstrate to the bankruptcy court that you lack the means to repay your creditors over a period of time. If you fail the means test, your only recourse is through Chapter 13, where you can renegotiate your debt to be paid over a three-to-five year period.

The first thing to understand is that you cannot typically discharge debt on secured assets. Accordingly, you won’t be able to discharge a mortgage and keep the house. That means that your only realistic option in bankruptcy to avoid foreclosure is through a Chapter 13 petition.

When you file your Chapter 13 petition, an automatic stay goes into effect, prohibiting your creditors from taking any action outside the bankruptcy proceeding to collect the debt. As a practical matter, then, your foreclosure proceeding will be temporarily suspended until the stay is lifted. While the stay is in effect, you won’t have to make most payments. Under an ideal scenario, you can put some money way during the automatic stay, negotiate a new (and lower) mortgage payment, and refinance your home loan when you emerge from bankruptcy.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.

Speak Your Mind


Call Rockwall bankruptcy lawyer Carrie Weir at 972-772-3083 or fill out the contact from below for a free, confidential consultation to discuss your options.

How Can I Help

Complete the contact form
and I will email you.

  • This field is for validation purposes and should be left unchanged.

Consumer Bankruptcy

Can I keep my car? Will bankruptcy stop a foreclosure? Will I ever be debt-free again? How will I ever pay these medical bills?

Read More

Chapter 7 Bankruptcy

If you want to stop creditor harassment, eliminate repossession debt, stop garnishments and keep your house, and car, a Chapter 7 bankruptcy could help.

Read More

Chapter 13 Bankruptcy

Are you in jeopardy of losing your house? Are you making good money but everyone is asking for payment right now? Do you want or need to stop collections?

Read More