What can Bankruptcy Do to Prevent Foreclosure on my House?

If you are facing foreclosure on your home, bankruptcy is an excellent way to stop the foreclosure proceedings. The biggest protection offered by bankruptcy, the automatic stay, protects you from creditors who are attempting to harass you by threatening foreclosure, repossession, garnishment, and more, so thankfully bankruptcy can prevent foreclosure on your home. One thing to be aware of if you do choose to file for bankruptcy because of an imminent foreclosure is that in this specific scenario filing under chapter 13 is substantially more advantageous for you. Filing under chapter 7 will only give you five or six months’ worth of protection, and isn’t able to completely discharge secured property debt. Filing under chapter 13, however, will give you three to five years’ worth of protection along with the possibility of repaying back some of your mortgage so that as soon as you receive your discharge you still won’t be under threat of losing your home.

If you are struggling with a seemingly imminent foreclosure, it would be to your advantage to set up a consultation with a local bankruptcy attorney in order to understand how bankruptcy can help you in your current situation.

How are Student Loans Treated in Bankruptcy?

Student loans unfortunately are usually considered nondischargeable unsecured debt, so if you choose to pursue filing for bankruptcy your student loans will not be discharged with your other debt at the end of your case. Nevertheless, one advantage of filing for bankruptcy includes the protections of the automatic stay, an official order issued as soon as you file for bankruptcy that prevents creditors and other institutions to whom you owe money from attempting to collect the money they’re owned for the duration of the case. Student loans are included in the automatic stay, so filing for bankruptcy can provide some breathing room in which you can focus on eliminating or prioritizing other debts like vehicle loans or mortgages in chapter 13 without having to worry about paying back student loans until your case receives a discharge. In some rare cases student loans can be discharged in bankruptcy, but only if “undue hardship” can be proved according to §523(a)(8) of the United States Bankruptcy Code. “Undue hardship” has three characteristics: debtors with undue hardship cannot maintain a minimal standard of living for themselves and their dependents if forced to repay student loans, the state of hardship the debtor is in is likely to continue based on additional circumstances, and the debtor has made efforts in good faith to repay their loans.

To better understand if filing for bankruptcy is the right choice for you, it is recommended you set up a consultation with a local bankruptcy attorney.