File bankruptcy before or after foreclosure

As an individual that has run into dire financial difficulties and also being a homeowner naturally your first concern is going to be what is going to happen to your home. You may be on the brink where foreclosure is going to take place and you are trying to decide whether you should go bankrupt before the foreclosure becomes a reality or whether to apply for bankruptcy after the foreclosure action has begun.

One of the factors that will have to be taken into consideration is whether you are qualifying for Chapter 7 bankruptcy or Chapter Ideally if you have reached the point where you have no other resources to count on to help get you on track with your financial situation; you should consider filing for bankruptcy immediately.

Speaking with a qualified Houston attorney can assist you with this. If you are thinking of filing for bankruptcy or dealing with foreclosure, you should always consult with an experienced bankruptcy attorney to see how bankruptcy may be able to help you get out of debt and back on your feet.

Bankruptcy and foreclosure are often linked because bankruptcy is somewhat famous as a foreclosure stopper. How long does bankruptcy prevent foreclosure? That will depend on whether you file for Chapter 7 or Chapter 13 bankruptcy, whether you are able to maintain normal monthly mortgage payments, and how aggressive your lender chooses to be in pursuing the foreclosure sale. Chapter 7 bankruptcy is a faster process than Chapter 13 bankruptcy.

Most Chapter 7 cases are open and shut within a six-month window. When you file bankruptcy 7 or 13 , a court-ordered injunction, known as the automatic stay , prevents the bank from foreclosing on your home.

This is true even if you file bankruptcy the day before the foreclosure sale is set to take place. Now, on to the not-so-good news. Even after a bankruptcy case has commenced and the almighty stay is in place, lenders can file what is known as a motion for relief from stay.

The motion for relief allows them to continue with the foreclosure process even while your bankruptcy case is live.

However, even lenders who have successfully lifted the protection of the automatic stay are not always motivated to immediately resume with foreclosure.

In fact, one of the biggest problems that consumers in bankruptcy are facing right now is lenders who are unwilling to foreclose on collateral. Many homeowners may or may not have been informed, in discussing foreclosure, that losing their home is the end of the foreclosure road. However, this article is here to serve as confirmation that losing a home to foreclosure is not necessarily the final step, if a home is severely underwater. In a typical foreclosure setting with homeowners, the proceeds from a foreclosure sale are supposed to satisfy the underlying mortgage debt.

The bank will set a foreclosure sale date and sell the home to the highest bidder or may reacquire the home itself. Should the sale price at the foreclosure auction exceed what the bank is owed, then the homeowner will not be liable for anything further and the bank will not pursue the matter further. If this is the case, a deficiency lawsuit is begun by a lender who will sue borrowers to hold them personally liable for their mortgage debts.

Complete the Credit Counseling Course. Fill Out the Minimum Required Forms. Although the lien will remain, which means that if you default on payments, the lender can still foreclose. Pay Your Way Out of Debt. Seek Consumer Credit Counseling.

Get Help From Family and Friends. Settle With Creditors and Debt Collectors. Use Everything in This List. Mortgage lenders take foreclosure records seriously, and some credit counselors believe a foreclosure on your credit report looks even worse than a bankruptcy.

A foreclosure or short sale will typically reduce your credit score between 85 and points, while a bankruptcy may knock it down between points. The cost of preventing a foreclosure is not easily categorized. When you file bankruptcy 7 or 13 , a court-ordered injunction, known as the automatic stay, prevents the bank from foreclosing on your home. The motion for relief allows them to continue with the foreclosure process even while your bankruptcy case is live.

You'll still have to pay court-ordered alimony and child support, taxes, and student loans. The consequences of a Chapter 7 bankruptcy are significant: you will likely lose property, and the negative bankruptcy information will remain on your credit report for ten years after the filing date. Ask the county clerk for information on the specific forms and fees your county requires.