Can Filing for Bankruptcy Stop a Foreclosure?
March 4, 2024
Facing the threat of losing your home—a place where you've poured so much effort and where precious memories have taken place—can feel overwhelming. It's natural to experience a sense of despair, feeling as though you've exhausted all possible avenues.
However, I want to assure you that even in the face of foreclosure, options remain for you to regain control and safeguard what's yours.
As a reputable attorney at Deborah Brooks & Associates, P.C., I've had countless clients come to me in distress, facing the threat of foreclosure. There are numerous reasons why you might find yourself in this predicament. Financial hardship such as job loss, overwhelming medical expenses, or even a divorce can lead to missed mortgage payments. Before you know it, you're in danger of losing your home. Fortunately, I'm here to help.
Reasons for Foreclosure
Foreclosure is more common than you might think, and it's not always due to reckless spending. Here are some common reasons for foreclosure:
Failure to make mortgage payments on time: This is the most common reason for foreclosure. If you miss several mortgage payments, your lender will initiate foreclosure proceedings. This can happen for various reasons, such as job loss, medical emergencies, or unexpected expenses.
Failure to pay property insurance: As part of your mortgage agreement, you're required to maintain property insurance. If you fail to do so, your lender may see this as a breach of contract and initiate foreclosure.
Failure to pay property taxes: Not paying property taxes can result in foreclosure proceedings being started by the government.
You need to know that under federal law, the servicer usually can't officially begin a foreclosure until you're more than 120 days past due on payments, subject to a few exceptions. My firm, with locations in Oklahoma City and Lawton, can help you navigate this challenging situation.
The Foreclosure Process in Oklahoma
If you're in this situation, it's important to understand the foreclosure process in Oklahoma. Here's what you should know:
Notice of Default: When you fall behind on your mortgage payments, your lender will send a notice of default. This is essentially a warning that foreclosure proceedings may begin if the default isn't resolved.
Foreclosure Lawsuit: If you're unable to resolve the default within a specified timeframe, the lender will file a foreclosure lawsuit. This lawsuit is served to you, giving you the opportunity to respond.
Court Judgement: If a resolution isn't reached, the court may issue a judgment of foreclosure. This means your home could be sold at a public auction.
Redemption Period: Oklahoma has a redemption period after the foreclosure sale, allowing you the chance to reclaim your property within a specific timeframe.
How Filing for Bankruptcy Affects Foreclosure
Filing for bankruptcy is one of the options available to you. Here's how it affects foreclosure:
Automatic Stay: When you file for bankruptcy, an automatic stay is put into effect. This stay halts all collection activities, including foreclosure. It provides temporary relief, allowing you time to address your financial situation.
Temporary Relief: The automatic stay provides temporary relief and buys you some time. However, it's crucial to understand that this is not a permanent solution.
Filing Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a specific type of bankruptcy that might be suitable in your situation. Here's what you should know:
Repayment Plan: Chapter 13 bankruptcy involves creating a repayment plan that allows you to catch up on missed mortgage payments over a period of three to five years.
Prevent Foreclosure: By filing Chapter 13 bankruptcy, you can potentially prevent foreclosure and keep your home while restructuring your debts.
How Chapter 13 Bankruptcy Can Help in Foreclosure
Chapter 13 bankruptcy can be a powerful tool in foreclosure prevention. Here are some benefits:
Stop Foreclosure Proceedings: Chapter 13 bankruptcy allows you to stop foreclosure proceedings and create a manageable repayment plan.
Catch Up on Missed Payments: Through this plan, you can catch up on missed mortgage payments and other debts while keeping your property.
Reorganize Finances: It provides an opportunity to reorganize your finances and regain control over your financial situation.
What Chapter 13 Bankruptcy Can’t Do
However, it's important to remember that Chapter 13 bankruptcy has its limitations:
Cannot Eliminate Certain Debts: Chapter 13 bankruptcy cannot eliminate certain debts, such as student loans and certain taxes.
Requires Steady Income: It requires you to have a steady income to make the proposed repayment plan feasible.
In short, Chapter 13 bankruptcy can be a viable solution for many facing foreclosure. If you're in this situation, don't hesitate to reach out to my firm, Deborah Brooks & Associates, P.C. I serve clients throughout Western Oklahoma from my offices in Oklahoma City and Lawton. Let's explore your options together. Note that it's not about what you've lost, but what you can save.
Take Legal Action
At Deborah Brooks & Associates, P.C., I can help you explore your options and guide you through this stressful time. I have the knowledge, experience, and resources to fight for what's yours while keeping your best interests in mind. Schedule a consultation to get the legal assistance you need during these trying times.