If you are struggling to pay your monthly bills, you are certainly not alone. In fact, according to reporting from CBS News, 70% of Americans report experiencing financial difficulties. A Chapter 7 bankruptcy filing may be an effective way both to get your financial affairs in order and to build a solid financial future.
The automatic stay is often the first benefit of filing for Chapter 7 bankruptcy protection. This stay temporarily stops collections activities, including an imminent home foreclosure. Still, Chapter 7 bankruptcy does not always protect homes from the foreclosure process.
Exceptions to the automatic stay
The second your file for Chapter 7, its automatic stay stops foreclosure proceedings. There are some exceptions, though. If a judge dismissed a bankruptcy filing during the previous year, the stay only lasts for 30 days. Even worse, if there are two or more bankruptcy dismissals in the past year, there is no automatic stay.
No permanent relief
The automatic stay provides temporary relief, but it usually does not last long. If you cannot pay past-due mortgage amounts, the court is likely to lift the stay. This may result in the quick loss of your home.
If you want to keep your home after the automatic stay lifts or your bankruptcy concludes, you may be able to take advantage of the limited homestead exemption. Chapter 7 does not include any means for addressing missed mortgage payments, however.
You may also try to negotiate with your mortgage lender before you file for Chapter 7 bankruptcy protection. If you wait to do so until after you declare bankruptcy, though, you are apt to lose the opportunity.