Filing for Bankruptcy to Stop a Foreclosure on My Home

Filing a Chapter 7 bankruptcy temporarily halts the lender’s right to foreclose on the borrower's home. However, eventually the foreclosure usually proceeds and the borrower loses his house. Filing for bankruptcy should be considered only as a last resort.

Considering Filing for Bankruptcy

Schemes have been designed to entice a homeowner facing foreclosure to transfer a portion of the title to his home to a third person, who then files for bankruptcy. While this may temporarily delay the foreclosure, courts are becoming aware of the tactic and the delay may be very short-lived. Typically, the homeowner pays large fees and loses his home anyway. Some of the people engaging in such schemes have also been charged with fraud.

Filing Chapter 13

If bankruptcy seems to be an option, consider a Chapter 13 or "wage earner" repayment bankruptcy as an alternative to a Chapter 7 straight bankruptcy. Under a Chapter 13 plan, it is possible to make up the missed payments from your income through a repayment plan. This can be an effective way for you to keep your home. 

If you are facing foreclosure, bankruptcy may make sense depending on your other obligations and income sources. Consulting with a bankruptcy attorney may be very helpful in clarifying the best option for your financial situation.